CIP Incoterms — key features and reliability guarantees

In international logistics, it is very important to understand how risks and responsibilities are distributed. This is precisely what the Incoterms rules were developed for — trade terms that standardize agreements between parties. CIP (short for Carriage and Insurance Paid to) is the topic of today’s article from DiFFreight experts.

CIP delivery terms

CIP delivery is an Incoterms term in which the seller undertakes the organization and payment of transportation and cargo insurance to the destination point. The risk transfers to the buyer when the goods are handed over to the first carrier.

Let’s say a Polish company sells equipment to a client in Brazil under CIP terms. The seller handles export clearance, packages the equipment, hires a logistics company, takes out insurance, and hands over the cargo.
During transshipment, part of the cargo is damaged. According to CIP, the risk had already transferred to the buyer. But the supplier had arranged insurance, so the client in Brazil will receive compensation.

CIP delivery terms apply to all types of transport, including multimodal shipments.

Seller’s responsibilities include:

• Packaging and labeling of the goods
• Export customs clearance
• Organizing and paying for the main carriage to the destination
• Arranging and paying for insurance with minimum coverage in case of a claim — at least 110% of the total cargo value
• Providing documentation (bill of lading, insurance certificate, commercial invoice, etc.)
• Loading onto the buyer’s transport vehicle

Note: in case of a claim, the consignee submits the insurance claim.

Buyer’s responsibilities:

• Import customs clearance
• Payment of duties and taxes in the country of destination
• Accepting the goods at the agreed point: warehouse, terminal, etc.

CIP Incoterms provide that the seller bears the following costs:

• freight payment;
• export charges;
• documentation in transit countries;
• unloading (unless otherwise specified in the contract);
• insurance.

These Incoterms conditions are favorable for small and medium importers, buyers who do not want to organize logistics or insure cargo themselves. CIP also works well for multimodal transport, since it is the seller’s responsibility.

Customs brokerage services

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This service is not beneficial for consignees with their own logistics or for exporters who do not want to incur additional expenses. If a client wants the seller to bear the risk longer, DAP or DDP would be better.

CIP Incoterms 2020, 2010, and 2000: evolution of rules

The rules are updated about once a decade. The essence of Incoterms remains the same, but each edition includes clarifications. The 2000 and 2010 versions specified insurance with minimum coverage (ICC C).

The CIP Incoterms 2020 edition requires the seller to provide insurance with maximum coverage — ICC A. This is often called an “all-risks” policy, although there are exceptions (e.g., poor packaging, acts of war).

CIP Delivery — Potential Issues

Key challenges you may face:

1. Risk transfer occurs before the goods reach the destination

Many buyers mistakenly assume that risk transfers upon arrival. However, it's crucial to read the agreement carefully to understand when you become responsible for the goods.

2. Inadequate insurance policy

Even with ICC A coverage, the insurance may not cover all potential losses (e.g., force majeure or delays).
DiFFreight recommends requesting a copy of the insurance policy and, if needed, arranging additional insurance. These extra costs will be your responsibility.

3. No control over the carrier

You can't influence which carrier the supplier selects.
We recommend including clear requirements for the transport company and agreeing on key delivery terms with the seller.

4. Delays and document issues 

Errors in documentation can lead to customs delays and fines.
Clearly define the list of required documents, their deadlines, and how they will be transferred between parties. Engage a customs broker — a third party that handles customs clearance during import procedures.

Avoid risks by choosing the right Incoterms

Incoterms should be selected based on logistics, control, and cost-efficiency — not habit or templates. DiFFreight has years of experience in international logistics and will help you choose the best terms for your shipment, depending on:

• the mode of transport: sea, air, or road;
• your capabilities — whether you can handle loading and unloading;
• your preferred shipping rates;
• and other required operations.

CIP terms are generally more expensive than those where the seller does not handle logistics or insurance. Some practical tips:

• For experienced importers with a logistics infrastructure, FCA or FOB is a better fit — more control and lower costs.
• For new businesses or buyers without experience, CIP or DDP is safer, as the seller handles everything — including risks and insurance.
• If predictable costs are essential, choose DDP — the final price includes all expenses, with delivery right to your door.

CIP is a flexible solution for international trade. If you want to shift responsibility for transport and insurance to the seller, it's the ideal choice. But it’s important to understand each party’s obligations during the transaction. Trust DiFFreight’s professionals with your cargo management and logistics — schedule a consultation today!