Incoterms CIP: Carriage and Insurance Paid To

Named Place Requirement: Place of Destination

The seller is obligated to secure all-risk insurance coverage.

Carriage and Insurance Paid To (CIP), the seller assumes all risk until the goods are delivered to the first carrier at the place of shipment—not the place of destination. Once the goods are delivered to the first carrier, the buyer is responsible for all risks.

However, the seller is responsible for the cost of carriage as well as all-risk insurance coverage until the freight reaches the named place of destination.

A carrier is any person or company who undertakes the carriage of goods, such as a shipping line, airline, trucking company, railway or freight forwarder.

In multimodal shipments, the place of shipment is the first carrier used.

CIP Incoterm Obligations

Seller’s Obligations

• Goods, commercial invoice and documentation
• Export packaging and marking
• Export licenses and customs formalities
• Pre-carriage and delivery
• Loading charges
• Cost of delivery at named place of destination
• Proof of delivery
• Cost of pre-shipment inspection
• All-risk insurance coverage

Buyer’s Obligations

• Payment for goods as specified in sales contract
• Import formalities and duties
• Cost of import clearance pre-shipment inspection

The CIP rule is similar to CPT with one very important difference. This rule requires the seller to take out maximum insurance cover under Institute Cargo Clauses (A) or (Air) or similar, for the buyer’s risk. The seller must give the buyer any insurance document the buyer will need in case it must claim under that insurance.

CIP guidance from  a TS-Trade Specialist

Any excerpts quoted from the Incoterms® 2020 rules are the copyright of the International Chamber of
Commerce. Source: ICC website. The full text of the 2020 edition of the Incoterms rules is available at
https://2go. iccwbo.org/. The word “Incoterms” is a registered trademark of the International Chamber of Commerce.