What is Cost, Insurance and Freight?
Cost, Insurance and Freight (CIF) is an Incoterms 2020 rule for sea and inland waterway transport under which the seller delivers by placing the goods on board the vessel at the port of shipment, pays freight to the named port of destination, and also buys cargo insurance for the buyer's benefit. Risk passes on board at origin, exactly as under CFR; the insurance exists to protect the buyer during the voyage. The default level of cover is minimum cover under Institute Cargo Clauses (C) or similar clauses, whereas Incoterms 2020 raised the default under CIP to Clauses (A). The insured amount must be at least 110 percent of the contract price, in the contract currency, and cover must run from the point of delivery to at least the named port of destination. The seller must give the buyer the policy or insurance certificate so the buyer can claim directly against the insurer.
Why it matters for forwarders
For forwarders, CIF decides who books freight and whose insurance responds when cargo is lost. Institute Cargo Clauses (C) cover named major casualties such as fire, stranding, sinking, collision and general average, but not theft, sea water entry or most handling damage, so buyers of manufactured goods often need to require Clauses (A) in the sales contract. Under a letter of credit, UCP 600 Article 28 requires the insurance document to be dated, or effective, no later than the date of shipment, and if the credit is silent, to show cover of at least 110 percent of the CIF value. Destination charges outside the carriage contract, import clearance and duties remain with the buyer. ICC considers CIF unsuitable for containers handed over at a terminal before loading; CIP covers that case.