What is Carriage and Insurance Paid To?
Carriage and Insurance Paid To (CIP) is an Incoterms 2020 rule for any mode of transport under which the seller contracts and pays for carriage to a named place of destination and also buys cargo insurance for the buyer's benefit. Risk passes from seller to buyer when the seller delivers the goods to the first carrier at the agreed point, not when they reach destination, so the rule has two critical points: delivery and destination. The seller clears the goods for export, while import clearance and duties remain with the buyer. Incoterms 2020 raised the minimum insurance under CIP to Institute Cargo Clauses (A) or similar all-risk cover, with at least 110 percent of the contract price insured. CIP differs from CPT only by the insurance obligation and from CIF, which is limited to sea and inland waterway transport and requires only Clauses (C) cover.
Why it matters for forwarders
For forwarders, CIP means the seller is the shipper and booking party for main carriage and must produce an insurance policy or certificate that the buyer can claim on. Many sellers still quote CIP with Clauses (C) cover out of habit from CIF, which no longer meets the 2020 rule unless the contract says otherwise. Because risk transfers at the first carrier, the buyer bears loss in transit even though the seller paid freight, which is why the insurance must name or be assignable to the buyer. Name the place of delivery as well as the destination precisely, since an unspecified delivery point can leave the transfer of risk ambiguous in multimodal moves. CIP is often preferred over CIF for containerised cargo because risk can pass when goods are handed over at an inland terminal rather than only when loaded on board.