Marcus Weber
Senior Trade Finance Advisor
Two decades in trade finance across European and Asian banks, advising corporates on payment instruments, credit structures, and documentary risk.
Short answer
CIP (Carriage and Insurance Paid To) means the seller pays carriage and all-risk insurance (Institute Cargo Clauses A, 110% of value) to the named destination, while risk transfers to the buyer at first-carrier handover. CIP works for any transport mode and is the multimodal equivalent of CIF — but with a critical upgrade: Incoterms® 2020 raised CIP's default cover from minimum (ICC C) to all-risk (ICC A).
What CIP (Carriage and Insurance Paid To) Means
CIP belongs to the C-group of Incoterms® 2020 rules (main carriage paid — any transport mode) and applies to any mode or modes of transport. The rule's operative mechanics: risk transfers when the goods are handed to the first carrier contracted by the seller — identical to CPT. Costs follow a different line — seller pays carriage to the named destination plus all-risk insurance; buyer bears risk from first-carrier handover and destination costs.
Seller and Buyer Obligations Under CIP
| Seller Obligations | Buyer Obligations |
|---|---|
| Deliver the goods to the first carrier at the agreed point, export-cleared | Bear all risk from delivery to the first carrier |
| Contract and pay carriage to the named place of destination | Pay destination charges not included in the seller's carriage contract |
| Obtain all-risk cargo insurance of at least 110% CIP value under Institute Cargo Clauses (A) | Clear the goods for import and pay duties and taxes |
| Provide commercial invoice, transport document, and insurance certificate | Arrange additional insurance if the voyage extends beyond the CIP destination |
Incoterms® deliberately cover only the sale contract: they allocate delivery, risk, cost, and clearance — never ownership transfer, payment terms, or breach remedies. Those belong in the sales contract itself, which should cite the rule precisely: "CIP [named place] Incoterms® 2020."
Risk Transfer and Cost Allocation
| Dimension | CIP Position |
|---|---|
| Risk transfer point | When the goods are handed to the first carrier contracted by the seller — identical to CPT. |
| Cost split | Seller pays carriage to the named destination plus all-risk insurance; buyer bears risk from first-carrier handover and destination costs. |
| Insurance | The seller must obtain all-risk insurance covering at least 110% of the CIP value under Institute Cargo Clauses (A) — the strongest default insurance obligation in Incoterms® 2020. |
| Transport modes | Any mode or modes of transport |
| Export clearance | Seller |
| Import clearance | Buyer |
When to Use CIP — and When Not To
- Containerized and multimodal shipments where the buyer wants seller-arranged all-risk cover
- High-value manufactured goods where ICC (A) all-risk protection is essential
- The default C-group choice for any shipment that isn't bulk sea trade
- LC transactions — CIP's document set fits documentary credit practice
Avoid CIP when the buyer's own insurance program is cheaper or broader — use CPT and insure independently. Also avoid when the buyer controls carriage (FCA fits better) or for bulk sea trades where CIF convention dominates.
Common CIP Mistakes
- Assuming CIP insurance is minimum cover — Incoterms® 2020 requires ICC (A) all-risk, unlike CIF's ICC (C)
- Treating CIP like a delivered rule — risk still transfers at first-carrier handover
- Naming a destination without clarifying which destination charges the carriage contract includes
- Accepting an insurance certificate that doesn't evidence ICC (A) cover or 110% valuation
Most CIP disputes trace to imprecise contract language — an unnamed place, an unspecified edition, or a rule chosen for quotation convenience rather than operational fit. The discipline is simple: name the exact place, cite "Incoterms® 2020," and choose the rule whose risk point matches where control of the cargo actually changes hands.
Key takeaways
- CIP = CPT plus seller-obtained all-risk insurance (ICC A, 110% of value).
- Incoterms® 2020 upgraded CIP's default cover from ICC (C) to ICC (A) — a major change.
- Risk transfers at first-carrier handover, not at destination.
- The multimodal equivalent of CIF — and the better default for container trade.
- Works for any transport mode or combination of modes.
Frequently asked questions
Two things: transport mode and insurance level. CIF is sea-only with minimum ICC (C) cover; CIP works for any mode and requires all-risk ICC (A) cover under Incoterms® 2020. Both transfer risk at origin (on board for CIF, first-carrier handover for CIP) while the seller pays freight and insurance to destination.
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