CIP (Carriage and Insurance Paid To)

TL;DR: CIP means the seller pays both transport and insurance to a named destination. Risk still passes to the buyer when the goods are handed to the first carrier.

CIP works for any mode of transport. The seller clears the goods for export, contracts carriage to the named place, and buys cargo insurance that covers the buyer during transit. The buyer handles import clearance, duties and any costs not covered by the carriage contract.

Incoterms 2020 raised the insurance requirement for CIP. The seller must now buy cover that meets Institute Cargo Clauses (A), which is broad all-risks cover, subject to listed exclusions. The minimum insured value is 110 percent of the contract price, in the currency of the contract. This is higher than CIF, which still only requires the more limited Clauses (C) cover.

Because the buyer holds the risk during transit, the policy must allow the buyer to claim directly. Ask the seller for the insurance certificate or policy before the goods ship, and check the insurer, the covered route, and how to file a claim at destination.

For fragile goods like glass mosaic on crates or pallets, all-risks cover is useful, but read the exclusions. Many policies exclude damage caused by poor packing, so good crating and corner protection still matter.

The parties can agree on lower cover if they wish, but they must say so in the contract. Compare with CPT, CIF and Cargo Insurance.