CIP and CIF, Freight Insurance

CIP and CIF are common terms regarding insurance coverage in freight delivery agreements. Although they are similar and often used in the same way, CIP (Carriage and Insurance Paid to) is not to be confused with CIF (Cost, Insurance, and Freight).

Carriage and Insurance Paid to, or CIP, may be used to refer to any mode of transportation where the seller is responsible for insurance coverage until the cargo reaches an agreed-upon destination. Only the minimum coverage is required, so the buyer must make arrangements if more extensive insurance coverage is desired.
If multiple carriers are involved in a delivery, CIP typically indicates that the cargo is insured up to the first transfer of carriers. After that the next carrier is responsible for the load.

Cost, Insurance, and Freight, or CIF, is used in sales contracts when cargo is delivered overseas. If you are not transporting goods over an ocean or through inland waterways, then use the term CIP. In CIF, the seller is responsible for getting the load to a designated carrier and destination. However, the risk is passed on to the buyer after such cargo leaves the port of shipment.

If you are selling or buying overseas, be sure to clarify the terms in the sales contract and know exactly when you assume risk of your shipment or purchase. Many freight carriers offer insurance of about $0.08-$0.10 per pound of cargo, so if you need more coverage than that, be sure to get plenty of free quotes from multiple insurers.

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