What is CIF?
CIF, short for Cost, Insurance and Freight, is one of the eleven Incoterms® 2020 rules. The seller clears the goods for export, loads them on board, and pays the sea transport and cargo insurance to the named port of destination, for example “CIF Rotterdam, Incoterms 2020”. The risk, however, passes to the buyer at the port of loading, as soon as the goods are on board.
CIF is for sea and inland waterway transport only. For other modes, CIP is the equivalent.
Core principle: The seller pays to the destination port, but the buyer carries the risk from the moment the goods are on board at origin, protected by the seller’s insurance.
Who does what under CIF
| Task | Seller | Buyer |
|---|---|---|
| Export clearance and loading on board | ✓ | |
| Sea transport to the destination port | ✓ | |
| Cargo insurance (minimum cover, 110%) | ✓ | |
| Unloading and destination port charges | ✓ unless included in the transport contract | |
| Import clearance, duty and import VAT | ✓ | |
| Risk passes | When the goods are on board at the port of loading | |
What to know before you buy CIF
Minimum insurance only
CIF requires cover in line with Institute Cargo Clauses (C), the minimum standard, for 110% of the contract price.
Watch out for: Clauses (C) cover major incidents, not theft or most handling damage. Ask for all-risks cover or insure the gap yourself.
Destination charges
Terminal handling, port fees and delivery from the port are usually the buyer’s, and some carriers charge them at high rates on arrival.
Why it matters: A cheap CIF price can end up more expensive than FOB with your own forwarder.
Less control
The seller chooses the carrier and routing, so you have less say over transit times and visibility.
CIF and EU customs value
EU customs duty is calculated on the customs value of the goods at the point where they enter the EU: the price paid plus transport and insurance costs up to the EU border. This is why CIF value is often used as shorthand for the duty base in the EU, whatever Incoterm the contract uses. Import VAT is then charged on the customs value plus duty and transport costs to the first destination in the EU.
Example: An Estonian furniture brand buys tables CIF Muuga (Tallinn) for EUR 40,000. Duty is calculated on EUR 40,000, as that already includes transport and insurance to the EU border. The brand pays port charges in Muuga and transport to its warehouse itself.
Frequently asked questions
When does risk pass under CIF?
When the goods are on board the vessel at the port of loading, not when they arrive at the destination port.
How much insurance does CIF include?
Minimum cover in line with Institute Cargo Clauses (C) for 110% of the contract price, unless the parties agree more.
Can CIF be used for air or road shipments?
No. CIF is for sea and inland waterway transport only. For other modes use CIP, which also requires all-risks insurance.
Is EU customs duty based on the CIF value?
Broadly, yes. The EU customs value includes transport and insurance costs up to the point where the goods enter the EU.
