Where delivery happens
When the goods are handed to the first carrier at the place of shipment.
The seller
- Export clearance
- Carriage to the named destination
- Cargo insurance at the higher 'all risks' level (Institute Cargo Clauses (A) or similar) for at least 110% of the contract value
The buyer
- Risk from handover to the first carrier (covered by the seller's insurance)
- Import clearance, duty and GST/VAT
When risk passes
Passes at the first carrier in the seller's country; the insurance policy protects the buyer.
When to use CIP
Multimodal or air shipments where the buyer wants the seller to arrange both freight and insurance.
Watch out
Since Incoterms 2020, CIP requires the higher 'all risks' cover by default (CIF still only requires minimum cover). Check the policy names the buyer as able to claim.
Example
CIP Melbourne Airport: the seller books and insures the air freight; damage in transit is claimed on the seller-arranged policy.
How it appears on the invoice
Write the three-letter code, the named place and the rules version, for example CIP Melbourne Airport (Incoterms® 2020). The full name is not needed on the document. In Vendara Trade Documents you pick CIP – Carriage and Insurance Paid To from the list and the invoice prints just CIP with your named place.
Frequently asked questions
What does CIP mean?
CIP stands for Carriage and Insurance Paid To (Incoterms® 2020). Same as CPT, plus the seller must buy cargo insurance for the buyer's benefit up to the named destination.
Where does risk pass under CIP?
Passes at the first carrier in the seller's country; the insurance policy protects the buyer.
Who pays import duty and GST under CIP?
The buyer pays import clearance, duty and import GST or VAT.
When should I use CIP?
Multimodal or air shipments where the buyer wants the seller to arrange both freight and insurance.
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