CIP (Carriage and Insurance Paid To) - Incoterm 2020 - Obligations, Risk, Customs Value
C - Main carriage paid
Transport mode
All modes
Valuation group
cpt
Risk transfer
First carrier
CIP (Carriage and Insurance Paid To) is an Incoterms® 2020 rule that requires the seller to contract and pay for both transport AND insurance of the goods to the agreed place of destination. It is the equivalent of CPT with an additional insurance obligation.
The fundamental characteristic of CIP is the dissociation between the point of risk transfer and costs (identical to CPT): risks transfer to the buyer upon handover to the first carrier, while the seller bears the costs of transport AND insurance to the agreed destination.
Major change in Incoterms® 2020: under CIP, the seller must now take out insurance complying with Institute Cargo Clauses (A) ("all risks" coverage), instead of Clauses (C) (minimum coverage) as required in the 2010 version. This is the highest level of insurance among all Incoterms. The parties may nevertheless agree on a lower level of coverage.
CIP can be used for any mode of transport (sea, air, road, rail, multimodal). It is the most comprehensive Group C Incoterm for multimodal transport, providing the buyer with combined transport and insurance protection.
The seller is responsible for export customs clearance but has no obligation regarding import customs clearance or the payment of import duties.
What level of insurance is required under CIP Incoterms 2020 - ICC A or ICC C?
Under CIP Incoterms 2020, the seller must take out insurance complying with Institute Cargo Clauses (A), which provides "all risks" coverage. This is the highest level of cargo insurance available. The minimum insured value is the contract price plus 10% (110%), in the currency of the contract.
Why does CIP require ICC A (all risks) while CIF only requires ICC C?
The ICC upgraded CIP to Institute Cargo Clauses (A) in Incoterms 2020 because CIP is used for multimodal transport where goods face more varied risks across multiple carriers and handling points. CIF, used exclusively for maritime transport, retained ICC C (minimum coverage) as it typically applies to bulk commodities where the risk profile is different. The parties may contractually agree on a different level under either rule.
What is the difference between Institute Cargo Clauses A and C?
Institute Cargo Clauses (A) provide "all risks" coverage, insuring against all causes of loss or damage except specific exclusions (war, strikes, inherent vice, delay). Clauses (C) only cover named perils: fire, explosion, vessel stranding/sinking/capsizing, collision, jettison, and general average. Clauses (C) do not cover theft, pilferage, water damage, breakage, or handling damage.
Does the seller pay for all-risks insurance under CIP?
Yes, the seller must pay for Institute Cargo Clauses (A) insurance at their own expense under CIP Incoterms 2020. The cost of Clauses (A) is higher than Clauses (C), and the seller must factor this into their pricing. The insurance must cover at minimum 110% of the contract value, from delivery to the first carrier up to the agreed destination.
Can the parties agree on a lower insurance level than ICC A under CIP?
Yes, the parties are free to agree on a lower level of coverage, such as Clauses (B) or Clauses (C), by explicitly stating this in the contract. However, if the contract is silent on insurance level, Clauses (A) apply by default under CIP Incoterms 2020. Any deviation should be clearly documented.
Why is CIP recommended over CIF for containerized shipments?
CIP is recommended for containers because it transfers risk to the buyer upon handover to the first carrier, which typically occurs at the container terminal. Under CIF, risk only transfers when goods are placed on board the vessel, creating a coverage gap between terminal delivery and vessel loading. CIP also provides ICC A (all risks) coverage versus ICC C (minimum) under CIF.
Who bears the risk during transport under CIP - seller or buyer?
The buyer bears the risk during transport under CIP. Risk transfers from the seller to the buyer upon handover of the goods to the first carrier, not at the destination. However, the buyer is protected by the insurance taken out by the seller (ICC A, all risks). If a loss occurs in transit, the buyer must claim directly from the insurer.
How does CIP insurance affect customs valuation in the EU?
The EU customs value is based on the CIF value (cost + insurance + freight) at the point of entry into the EU. If the CIP destination corresponds to the EU entry point, the CIP price can serve directly as the customs value since it already includes transport and insurance. Minor adjustments may apply if the destination extends beyond the EU border.
When does risk transfer from seller to buyer under CIP?
Risk transfers under CIP when the seller hands over the goods to the first carrier contracted for transport. This is the place of delivery, distinct from the place of destination to which the seller pays transport and insurance. If multiple carriers are involved and no specific delivery point is agreed, risk transfers upon handover to the first carrier in the chain.
What is the difference between CIP and CPT?
The only difference between CIP and CPT is the insurance obligation. Under CIP, the seller must take out cargo insurance complying with ICC A (all risks) at their own expense. Under CPT, the seller has no insurance obligation whatsoever. Both rules transfer risk at the same point (first carrier) and can be used for any mode of transport.
Does CIP cover war and strikes risks?
War and strikes risks are not automatically included in the CIP insurance obligation. Institute Cargo Clauses (A) exclude war and strikes by default. If the buyer requests this additional coverage, the seller must procure it (if obtainable), but at the buyer's expense. The need for war and strikes coverage should be specified in the contract.
Can the buyer claim directly from the insurer under CIP?
Yes, the insurance policy must entitle the buyer, or any person with an insurable interest in the goods, to claim directly from the insurer. The seller must provide the buyer with the insurance policy or certificate as proof of coverage. This direct claim right is essential because the seller is not party to any transit loss claim.
What minimum insurance value is required under CIP?
The seller must insure the goods for at least the contract price plus 10%, i.e. 110% of the contract value. The insurance must be denominated in the currency of the contract. This 110% minimum applies to all Incoterms with an insurance obligation (CIP and CIF). The parties may agree on a higher insured value.
Can CIP be used for maritime transport?
Yes, CIP can be used for any mode of transport, including maritime. While CIF is traditionally used for sea-only shipments, CIP is a valid alternative that offers superior insurance coverage (ICC A vs ICC C). CIP is particularly recommended over CIF for containerized maritime shipments, where the risk transfer point at the first carrier is more appropriate.
Who pays for transport under CIP?
The seller pays for transport under CIP, from the place of delivery to the agreed place of destination. The seller must contract for carriage on usual terms, by the usual route, in a customary manner for the type of goods. The seller also pays for any transport-related security requirements up to destination.
What happens if the destination country requires local insurance under CIP?
If the destination country requires cargo insurance to be taken out with a local insurer, the insurance procured by the seller in their own country may not be recognized or enforceable. In such cases, the parties should use CPT instead of CIP, allowing the buyer to procure insurance locally in compliance with local regulations.
Common mistakes
1Confusing CIP and CIF: CIP is for all modes with Clauses (A), CIF is for sea transport only with Clauses (C).
2Failing to verify whether the destination country requires insurance to be taken out locally, rendering the seller's insurance ineffective.
3Forgetting that risk transfers to the carrier and not at destination, despite the insurance - the buyer must manage the claim.
Seller vs buyer obligations
Obligation
Seller
Buyer
Export formalities
Loading
Main transport
Transport insurance
Unloading
Import formalities
Risk transfer diagram
ICC Explanatory notes
Delivery, risks and destination
Under CIP, "Carriage and Insurance Paid To" means that the seller delivers the goods - and transfers risk - to the buyer by handing them over to the carrier contracted by the seller, or by procuring goods so delivered.
As with CPT, once the goods have been delivered, the seller does not guarantee that the goods will arrive at the destination in good condition. Risk transfers from the seller to the buyer upon handover to the carrier. However, the seller must contract for both transport AND insurance from delivery to the agreed destination.
Two important places:
The place of delivery: where risk transfers to the buyer (handover to the carrier).
The place of destination: the point to which the seller pays for transport and insurance.
Applicable mode of transport
CIP can be used regardless of the mode of transport selected, including multimodal transport. It is the "all modes" equivalent of CIF (Cost, Insurance and Freight), which is restricted to sea transport only.
Insurance obligation - Clauses (A)
The seller must take out, at its own expense, cargo insurance complying with Institute Cargo Clauses (A) (LMA/IUA) or similar clauses, appropriate to the mode of transport used. The insurance must be obtained from underwriters or an insurance company of good repute.
Minimum coverage:
Contract value plus 10% (i.e. 110%), in the currency of the contract.
From the point of delivery (A2) to at least the agreed place of destination.
Additional coverage: at the buyer's request, the seller must provide, at the buyer's expense, any additional coverage available (War clauses, Strikes clauses).
Incoterms® 2020 change: unlike the 2010 version, CIP now requires Clauses (A) (all risks) rather than Clauses (C) (minimum coverage). This is the highest level of insurance among all Incoterms. The parties remain free to agree on a lower level of coverage.
Note: some countries require insurance to be taken out locally. In such cases, the parties should consider buying under CPT instead.
Specifying the place of delivery and destination
The parties are strongly encouraged to identify both places (delivery and destination) as precisely as possible, as the seller must contract for transport AND insurance up to that point, and it is the point to which transport and insurance costs are borne by the seller.
Place of delivery: if several carriers are involved and the parties do not agree on a specific place, risk transfers upon handover to the first carrier.
Unloading costs at destination: if the seller incurs unloading costs at destination under its contract of carriage, the seller is not entitled to recover those costs separately from the buyer, unless otherwise agreed.
Critical points
Dissociation of risks and costs despite insurance
Risk transfers to the carrier even though the seller pays transport + insurance - different from DDP.
Even under CIP, risk transfers to the buyer upon handover to the first carrier, not at destination. The seller pays for transport and insurance to destination but does not bear the risk during transit.
This means that if a loss occurs during transit, it is the buyer who must assert their rights against the insurer. The seller is not party to the claim.
Advantage: the buyer is covered by the insurance taken out by the seller, so they have financial recourse. But they must manage the claim themselves.
Recommendation: verify that the insurance taken out by the seller gives the buyer (or any person with an insurable interest) the right to claim directly against the insurer.
Insurance level - Clauses (A) - all risks
CIP 2020 requires Clauses (A) (all risks) - a major change from 2010.
Incoterms® 2020 change: under CIP, the seller must now take out insurance complying with Institute Cargo Clauses (A) - the most extensive coverage ("all risks").
Comparison of coverage levels:
Clauses (A): all risks coverage (except specific exclusions such as war, strikes). This is the level required under CIP 2020.
Clauses (B): intermediate coverage (extended named perils).
Clauses (C): minimum coverage (limited named perils). This was the level required under CIP 2010.
Note: the parties may agree on a lower level of coverage. If the contract is silent, Clauses (A) apply by default.
Cost: Clauses (A) are more expensive than Clauses (C). The seller must factor this into their pricing.
Local insurance requirement in certain countries
Some countries require insurance to be taken out locally - CIP may be problematic.
In some countries, regulations require cargo insurance to be taken out with a local insurer. The seller, who takes out insurance in their own country, may be unable to satisfy this requirement.
Consequence: the insurance taken out by the seller may not be recognized or enforceable in the country of destination.
Recommendation: in such cases, the parties should consider buying under CPT and letting the buyer take out insurance locally in their own country.
Detailed seller obligations (A1-A10)
Article A1General obligations
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.
Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
Article A2Delivery
The seller must deliver the goods by handing them over to the carrier contracted in accordance with A4, or by procuring goods so delivered. In either case, the seller must deliver the goods on the agreed date or within the agreed period.
Article A3Transfer of risks
The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstances described in B3.
Article A4Carriage
The seller must contract or procure a contract for the carriage of the goods from the agreed point of delivery, if any, at the place of delivery to the agreed place of destination or, if agreed, any point at that place.
The contract of carriage must be made on usual terms at the seller's expense and provide for carriage by the usual route and in a customary manner for the type of goods sold. If no specific point is agreed or determined by practice, the seller may select the point of delivery and the point at the place of destination that best suit its purpose.
The seller must comply with any transport-related security requirements up to destination.
Article A5Insurance
Unless otherwise agreed or customary in the particular trade, the seller must obtain at its own expense cargo insurance complying with Institute Cargo Clauses (A) (LMA/IUA) or similar clauses appropriate to the means of transport used.
The insurance shall be contracted with underwriters or an insurance company of good repute and shall entitle the buyer, or any other person having an insurable interest in the goods, to claim directly from the insurer.
At the buyer's request, the seller must, subject to the buyer providing any necessary information, obtain at the buyer's expense any additional coverage available, such as cover under the Institute War Clauses and/or Institute Strikes Clauses (LMA/IUA) (unless such cover is already included in the cargo insurance).
The insurance shall cover, at a minimum, the contract price plus 10% (i.e. 110%) and shall be in the currency of the contract.
The insurance shall cover the goods from the point of delivery (A2) to at least the agreed place of destination.
The seller must provide the buyer with the insurance policy or certificate or other evidence of insurance cover.
The seller must also provide the buyer, at the buyer's request, risk and expense, with the information that the buyer needs for procuring any additional insurance.
Article A6Delivery / transport document
If customary or at the buyer's request, the seller must provide the buyer, at the seller's own expense, with the usual transport document(s) for the transport contracted in accordance with A4.
This transport document must cover the contract goods and be dated within the agreed period of shipment. If agreed or customary, the document must also enable the buyer to claim the goods from the carrier at the agreed place of destination and enable the buyer to sell the goods in transit by the transfer of the document to a subsequent buyer or by notification to the carrier.
When such a transport document is issued in negotiable form and in several originals, a full set of originals must be presented to the buyer.
Article A7Export / import clearance
a) Export clearance: where applicable, the seller must carry out and pay for all export clearance formalities required by the country of export, such as:
export licence;
security clearance for export;
pre-shipment inspection;
any other official authorization.
b) Assistance with import clearance: where applicable, the seller must assist the buyer, at the buyer's request, risk and expense, in obtaining any documents and/or information relating to transit/import clearance formalities, including security requirements and pre-shipment inspection, required in any country of transit or in the country of import.
Article A8Checking / packaging / marking
The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.
The seller must, at its own expense, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in a manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.
Article A9Allocation of costs
The seller must pay:
a) All costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer (B9).
b) Freight and all other costs resulting from A4, including loading charges and any transport-related security costs.
c) Unloading costs at the agreed place of destination, but only if those costs are for the seller's account under the contract of carriage.
d) Transit costs that are for the seller's account under the contract of carriage.
e) The cost of providing the buyer with the usual proof (A6) that the goods have been delivered.
f) The costs of insurance resulting from A5.
g) Where applicable, duties, taxes and any other costs related to export clearance (A7a).
h) Reimbursement to the buyer of all costs and charges incurred in providing assistance in obtaining documents and information in accordance with B7(a).
Article A10Notices
The seller must notify the buyer that the goods have been delivered in accordance with A2.
The seller must give the buyer any notice needed to allow the buyer to receive the goods.
Detailed buyer obligations (B1-B10)
Article B1General obligations
The buyer must pay the price of the goods as provided in the contract of sale.
Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
Article B2Taking delivery
The buyer must take delivery of the goods when they have been delivered in accordance with A2 and receive them from the carrier at the agreed place of destination or, if agreed, at the point within that place.
Article B3Transfer of risks
The buyer bears all risks of loss of or damage to the goods from the time they have been delivered in accordance with A2.
If the buyer fails to give notice in accordance with B10, the buyer bears all risks of loss of or damage to the goods from the agreed date or the expiry date of the agreed period for delivery, provided that the goods have been clearly identified as the contract goods.
Article B4Carriage
The buyer has no obligation to the seller to make a contract of carriage.
Article B5Insurance
The buyer has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller, upon request, with any information necessary to enable the seller to procure any additional insurance requested by the buyer in accordance with A5.
Article B6Delivery / transport document
The buyer must accept the transport document provided in accordance with A6 if it is in conformity with the contract.
Article B7Export / import clearance
a) Assistance with export clearance: where applicable, the buyer must assist the seller, at the seller's request, risk and expense, in obtaining any documents and/or information relating to export clearance formalities, including security requirements and pre-shipment inspection, required in the country of export.
b) Import clearance: where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:
import licence and any licence required for transit;
security clearance for import and any transit;
pre-shipment inspection;
any other official authorization.
Article B8Checking / packaging / marking
The buyer has no obligation to the seller.
Article B9Allocation of costs
The buyer must pay:
a) All costs relating to the goods from the time they have been delivered in accordance with A2, other than those payable by the seller (A9).
b) Transit costs, unless those costs were for the seller's account under the contract of carriage.
c) Unloading costs, unless those costs were for the seller's account under the contract of carriage.
d) The costs of any additional insurance procured at the buyer's request in accordance with A5 and B5.
e) Reimbursement to the seller of all costs and charges incurred in providing assistance in obtaining documents and information in accordance with A5 and A7(b).
f) Where applicable, duties, taxes and any other costs related to transit or import clearance (B7b).
g) Any additional costs incurred if the buyer fails to give notice in accordance with B10, from the agreed date or the expiry date of the agreed period for shipment, provided that the goods have been clearly identified as the contract goods.
Article B10Notices
The buyer must, whenever it is agreed that the buyer has the right to determine the time of shipment and/or the point of receiving the goods at the agreed place of destination, give the seller sufficient notice thereof.
CIP vs CPT comparison
Critère
CIP
CPT
Insurance
Seller procures (Clauses A - all risks)
No obligation
Carriage
Seller arranges and pays
Seller arranges and pays
Transfer of risks
To first carrier
To first carrier
Cost for the seller
Transport + export + insurance
Transport + export
Buyer protection
Covered by seller's insurance
Must procure own insurance
Critère
CIP
CIF
Mode of transport
All modes (including multimodal)
Sea transport only
Insurance level
Clauses (A) - all risks
Clauses (C) - minimum coverage
Transfer of risks
To first carrier
On board the vessel at port of shipment
Typical use
Containers, multimodal, air freight
Bulk maritime, commodities
Transport document
Any transport document
Bill of lading
Impact on customs value
Incoterm CIP belongs to group CPT. This group determines which adjustments (AK/BA) are applied to the invoiced price to calculate customs value.
Multimodal transport with insurance: ideal when the seller must arrange both transport AND insurance (containers, international air freight).
When the buyer wants to be covered: CIP offers the best insurance coverage among Group C Incoterms (Clauses A - all risks).
Alternative to CIF for non-maritime transport: CIP is the "all modes" equivalent of CIF.
When the seller has better rates: the seller may obtain better transport AND insurance rates due to volume.
When to avoid CIP
If the country of destination requires local insurance: the insurance taken out by the seller may not be recognized. Use CPT and let the buyer insure locally.
If the buyer wants to control transport: use FCA.
If the buyer wants a "delivered" Incoterm: use DAP, DPU or DDP.
For sea-only transport: consider CIF (but note: CIF only requires Clauses C, versus Clauses A under CIP).
Recommended contractual clauses
Two distinct places: clearly specify the place of delivery (risk transfer) and the place of destination (end of seller's cost obligations).
Insurance level: confirm Clauses (A) or agree on a different level if the parties so wish.
Additional insurance: specify whether War or Strikes coverage is required.
Insurance beneficiary: ensure the buyer has the right to claim directly from the insurer.
Precise point of destination: identify the exact point to delineate the seller's cost obligations.
Analysis by profile
Advantages
Obligations limitées. L'acheteur n'est pas en charge des sujets de logistique liés au transport.
Disadvantages
L'acheteur ne choisit pas les prestataires de transport mais supporte les risques une fois les marchandises placées sur le premier moyen de transport.
Recommendations
Attention, il convient de distinguer précisément le lieu de livraison (= transfert des risques) du lieu de destination (= répartition des coûts).
Si l'acheteur est le plus à même de réaliser le transport international, il conviendra de choisir un autre incoterm.
Si l'acheteur a des couvertures d'assurance intéressantes, l'Incoterm CPT est à privilégier.
Important : Transport insurance is recommended for this Incoterm.
Comparative analysis (radar)
CIP
Compare with
Common mistakes
1
Confusing CIP and CIF: CIP is for all modes with Clauses (A), CIF is for sea transport only with Clauses (C).
2
Failing to verify whether the destination country requires insurance to be taken out locally, rendering the seller's insurance ineffective.
3
Forgetting that risk transfers to the carrier and not at destination, despite the insurance - the buyer must manage the claim.
4
Not requesting the insurance policy or certificate from the seller, preventing the buyer from claiming directly from the insurer.
5
Not specifying the desired insurance level in the contract, defaulting to Clauses (A) when a lower level might suffice.
CIP 2020: ICC A All-Risks Insurance (not ICC C) - The Trade Hub