CIF — Cost, Insurance and Freight

Mode of transport

Sea and inland waterway only

Definition

As CFR, plus the seller must contract cargo insurance for the buyer's benefit. Under Incoterms 2020 the minimum cover for CIF remains Institute Cargo Clauses (C); higher cover can be agreed.

Delivery point

On board the vessel at the port of shipment.

Risk transfer

On board at the port of shipment; the insurance policy protects the buyer during the voyage.

Seller costs

• Export clearance, origin charges, loading
• Ocean freight to the destination port
• Marine cargo insurance at minimum 110% of the invoice value

Buyer costs

• Discharge costs not in the freight
• Import clearance, duties, inland delivery
• Any upgrade of insurance cover

Insurance

Mandatory for the seller: minimum ICC (C), 110% of invoice value, in the contract currency, assignable to the buyer.

Export formalities

Seller's responsibility.

Import formalities

Buyer's responsibility.

Documents

• Commercial invoice, packing list
• On-board bill of lading
• Insurance policy or certificate
• Certificate of origin

Best use cases

The classic letter-of-credit sea sale — the buyer receives invoice, B/L and insurance policy as a document set.

Common mistakes

• Assuming ICC (C) covers theft or damage — it does not; agree ICC (A) if needed
• Using CIF for container shipments instead of CIP
• Insurance expiring before the goods reach the buyer's warehouse

Practical example

CIF Genoa, Incoterms® 2020, ICC (A) cover.