CIF - Cost, Insurance and Freight
Also known as: CIF clause
Incoterms® clause for sea transport: the seller bears freight and minimum insurance to the destination port, but risk passes to the buyer already upon loading on the vessel.
Description
CIF (Cost, Insurance and Freight) is one of the four classic sea-trade clauses of Incoterms® and is more convenient for buyers than FOB: the seller arranges sea freight to the destination port and takes out minimum insurance. Under Incoterms® 2020 CIF also applies only to sea and inland waterway transport; for containers CIP is recommended instead.
The key peculiarity for buyers: costs and risk do not transfer at the same point. The seller bears the costs of freight and insurance up to the destination port, but risk passes to the buyer already upon loading on the vessel at the port of shipment. If the goods are damaged during the sea voyage, the buyer must claim from the insurance (taken out by the seller). By default CIF requires only Institute Cargo Clauses (C) — very narrow cover; higher cover (Clauses A) must be expressly agreed. For textile importers CIF is attractive when they lack access to competitive sea freight rates or prefer a single vendor for goods and freight booking. Invoice reference: CIF Hamburg, CIF Rotterdam.
Properties
| Mode of transport | Sea or inland waterway only |
|---|---|
| Cost transfer | Destination port (seller bears freight + insurance) |
| Risk transfer | Already on board at port of shipment |
| Default insurance | Institute Cargo Clauses (C) - narrow cover |
Related product categories
Sources & references
1- ICC Incoterms® 2020 iccwbo.org https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/
