What is CIP?
CIP, short for Carriage and Insurance Paid To, is one of the eleven Incoterms® 2020 rules. It works like CPT: the seller pays transport to a named destination and risk passes to the buyer when the goods are handed to the first carrier. On top of that, the seller must take out cargo insurance that covers the buyer’s risk during the journey.
CIP works for all transport modes. It is the multimodal counterpart of CIF, which is limited to sea transport.
Core principle: The seller pays freight and insurance to the destination; the buyer carries the risk from the first carrier but is protected by the seller’s insurance.
The insurance requirement
All-risks cover
Since Incoterms 2020, CIP requires a high level of cover, in line with Institute Cargo Clauses (A), the broadest standard “all-risks” cover.
Why it matters: This is stricter than CIF, where the minimum cover (Institute Cargo Clauses C) is still enough unless the parties agree otherwise.
Amount
At least the contract price plus 10%, in the currency of the contract.
Beneficiary
The buyer must be able to claim directly from the insurer, so the seller hands over the policy or certificate.
Who does what under CIP
| Task | Seller | Buyer |
|---|---|---|
| Export clearance | ✓ | |
| Main carriage to the named destination | ✓ | |
| Cargo insurance (all risks, 110%) | ✓ | |
| Import clearance, duty and import VAT | ✓ | |
| Risk passes | When the goods are handed to the first carrier | |
Example: A Polish electronics brand buys smart-home devices from Taiwan on CIP Warsaw airport. The supplier pays air transport and all-risks insurance for 110% of the invoice value. When a carton goes missing in transit, the brand claims directly from the supplier’s insurer using the certificate it received with the documents.
Watch out for
- Insurance costs are built into the price: compare CIP quotes with CPT plus your own policy.
- Check the policy actually meets Institute Cargo Clauses (A) and covers the whole route to the destination.
- For customs, the EU values imports including transport and insurance to the EU border, so the freight and insurance in a CIP price still matter for duty.
Frequently asked questions
How is CIP different from the same term without insurance?
CPT and CIP both have the seller paying transport to the destination with risk passing at the first carrier. Under CIP the seller must also insure the goods for the buyer.
How much insurance does CIP require?
At least 110% of the contract price, with all-risks cover in line with Institute Cargo Clauses (A).
Can CIP be used for air shipments?
Yes. CIP works for all transport modes, which makes it the usual insured term for air shipments.
Who clears import under CIP?
The buyer, who also pays duty and import VAT.
