CIP (Carriage and Insurance Paid To) can be used for any mode of transport. Like CPT, the seller pays carriage to the named destination while risk transfers earlier when the goods are handed to the carrier. The added feature is the seller’s obligation to arrange cargo insurance for the buyer’s risk.
Risk and Cost Do Not Transfer at the Same Point
The seller delivers—and risk transfers—when the goods are handed to the carrier. The seller nevertheless contracts and pays for carriage to the named destination.
Insurance Under CIP
Incoterms® 2020 requires a higher level of insurance under CIP than under CIF. Unless otherwise agreed, CIP calls for cover comparable to Institute Cargo Clauses (A) or similar all-risks-style cover, subject to exclusions and policy terms. Parties should still check that the insured amount, route, commodity and exclusions suit the shipment.
| Activity | Seller | Buyer |
|---|---|---|
| Export clearance | Yes | — |
| Carriage to named destination | Yes | — |
| Cargo insurance | Yes, minimum required by CIP rule | May arrange supplementary cover |
| Transit risk after carrier handover | — | Yes |
| Import clearance/duties | — | Yes |
Example
CIP Buyer Warehouse, Doha: the seller hands the goods to the first carrier in Bahrain, pays carriage to Doha and arranges the required insurance. Risk transfers at carrier handover in Bahrain, not when the goods reach Doha.
CIP vs CIF
CIP is available for any mode or multimodal transport. CIF is restricted to sea and inland waterway transport and has a different default minimum insurance level. Containerized multimodal shipments are therefore often better evaluated under CIP than CIF.
Reference: ICC Incoterms® 2020, CIP explanatory notes.
