Carriage and Insurance Paid To (CIP)
The seller pays carriage to destination and takes all-risks cover (ICC(A)); risk passes when goods reach the first carrier. Any mode.
Carriage and Insurance Paid To (CIP) means the seller clears the goods for export, pays carriage to the named destination, and insures the goods for the buyer's benefit. It is the "any-mode" counterpart of CIF: risk passes to the buyer when the seller hands the goods to the (first) carrier, while carriage and insurance are borne by the seller to destination. A key change in Incoterms 2020 is that CIP's minimum cover was raised to Institute Cargo Clauses ICC(A) (all-risks), higher than CIF's ICC(C).
CIP suits any mode and is especially apt for containers, air freight and multimodal shipments of finished/industrial goods. The customary insured amount is again 110% of value. Practical notes: the point most easily confused between CIP and CIF is the cover level — CIF (sea only) defaults to minimum ICC(C), while CIP (any mode) defaults to all-risks ICC(A), so the premium cost differs in quoting; if the parties want lower cover under CIP it must be expressly agreed. Because risk passes early at the first carrier, all-risks cover better protects the buyer, which is why the 2020 edition raised CIP's insurance requirement.
FAQ
- Do CIP and CIF have the same insurance requirement?
- No — this is a headline difference in the 2020 edition. CIP (any mode) defaults to the top-tier ICC(A) (all-risks), while CIF (sea/inland-waterway only) defaults to the minimum ICC(C) (basic cover). A CIP quote usually carries a higher premium cost, which you should factor into pricing.
- Under CIP, how do risk and insurance relate?
- Risk passes to the buyer at handover to the first carrier, but the all-risks (ICC(A)) policy the seller takes runs to the buyer's benefit. So if loss occurs in transit, the buyer claims under the policy, while the insurance was paid for by the seller as a contractual obligation.
Related terms
Sources: https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/ · https://academy.iccwbo.org/incoterms/article/incoterms-2020-cip-or-cif/