CIP (Carriage and Insurance Paid To) is an Incoterm where the seller pays carriage and insurance to a named destination, while risk passes to the buyer at the first carrier.
CIP (Carriage and Insurance Paid To) is an Incoterm under which the seller pays for both carriage and insurance to a named destination, while risk passes to the buyer as soon as the goods are handed to the first carrier. CIP is essentially CPT with the added obligation for the seller to insure the goods.
Under CIP, the seller clears the goods for export, delivers them to the first carrier, and pays carriage and insurance to the agreed destination. Although the seller pays freight and insurance to the destination, the buyer bears the risk of loss or damage from the moment the goods reach the first carrier at origin. CIP can be used for any mode of transport and for multimodal shipments.
The defining feature of CIP is insurance. Under Incoterms 2020, the seller must arrange a high level of insurance cover — broadly equivalent to all-risks cover — unless the buyer and seller agree on a different level. This is a notable difference from CIF, which requires only minimum cover. Because the buyer benefits from the insurance in the event of a claim, it is important that the policy names the buyer or is transferable.
The seller handles export clearance, delivers to the first carrier, and pays carriage and insurance to the destination. The buyer bears risk from the first carrier onward and handles import clearance and duties at destination.
CIP and CPT are identical except that CIP includes seller-arranged insurance. CIF resembles CIP but applies only to sea and inland waterway transport and requires only minimum insurance. For containerised or multimodal shipments where the seller should provide strong insurance cover, CIP is generally the most appropriate choice.
CIP suits buyers who want the seller to arrange both freight and comprehensive insurance to the destination, and sellers who can secure competitive rates for both. It provides the buyer with a fully covered, delivered-to-destination cost while risk technically passes early.
CIP is a comprehensive multimodal Incoterm in which the seller pays carriage and arranges a high level of insurance to the destination, while risk passes to the buyer at the first carrier. Understanding the early risk transfer and the strong insurance requirement helps both parties manage protection for the goods in transit. Always name the destination and state "Incoterms 2020".