CIF (Cost, Insurance and Freight) is an Incoterms® 2020 rule used only for sea or inland waterway transport. The seller pays the ocean freight and arranges the required cargo insurance to the named destination port, but risk transfers earlier when the goods are delivered on board the vessel at the port of shipment.
Risk, Freight and Insurance
CIF separates the risk-transfer point from the cost destination. The seller may be paying freight and insurance to the destination port even though the buyer already bears the transit risk after on-board delivery at origin.
Insurance Under CIF
Under Incoterms® 2020, CIF requires the seller to obtain minimum cargo insurance broadly comparable to Institute Cargo Clauses (C), unless the parties agree otherwise. This is a lower default level than CIP. Buyers should check whether the minimum cover is sufficient for the commodity and route.
| Activity | Seller | Buyer |
|---|---|---|
| Export clearance | Yes | — |
| Deliver/load on board vessel | Yes | — |
| Pay ocean freight to destination port | Yes | — |
| Minimum cargo insurance | Yes | May purchase additional cover |
| Transit risk after on-board delivery | — | Yes |
| Import clearance/duties | — | Yes |
Example
CIF Port of Bahrain: the seller loads the goods on board at origin, pays ocean freight to Bahrain and arranges the required minimum cargo insurance. Risk transfers at origin once the goods are on board, not when they arrive in Bahrain.
CIF vs CIP
CIF is limited to sea/inland-waterway transport and has a lower default minimum insurance requirement. CIP works for any mode/multimodal transport and requires broader default cover. For containerized cargo delivered to a terminal before loading, CIP may be more appropriate than CIF.
Reference: ICC Incoterms® 2020, CIF explanatory notes.
