Carriage and Insurance Paid To (CIP) – Incoterms® 2020 Rules [UPDATED 2024]
Carriage and Insurance Paid To (CIP) is outlined in the Incoterms® 2020, requiring the seller to secure comprehensive insurance to cover the buyer’s risk.
In addition to this insurance aspect, CIP bears similarities to Carriage Paid To (CPT).
Introduction to Carriage and Insurance Paid To (CIP)
CIP signifies that the seller is obliged to transport goods to an agreed location in the buyer’s country, covering transportation costs and acquiring maximum insurance for the buyer’s protection.
However, the seller’s liability ceases once the goods are handed to the initial carrier at the departure point, transferring risk thereafter.
CIP can be utilized for any transportation mode.
CIP (Carriage and Insurance Paid To) – Key Differences from CPT
CIP has its roots in early international shipping and has largely remained stable over time. While CIP and CPT share many similarities, their main distinction lies in the insurance provision required under CIP, making it one of the few Incoterms that clarifies insurance responsibilities explicitly.
Under CPT, the seller must handle logistical costs up to the delivery point, while the buyer is responsible for insurance coverage, which CIP mandates the seller arrange.
Podcast on Carriage and Insurance Paid To (CIP)
CIP A1 / B1 General Obligations
A1 (General Obligations)
The seller must provide the goods with necessary documentation, including any proof of conformity as per the sales contract, whether in digital or paper form.
B1 (General Obligations)
The buyer is responsible for the agreed payment according to the sales contract without specific stipulations on the timing or mode of payment.
Advantages and Disadvantages of Carriage and Insurance Paid To (CIP)
CIP, established in Incoterms® 1980 and shortened in the 1990 updates, represents a nuanced evolution in the seller’s responsibilities through comprehensive insurance coverage for the buyer’s risks. The Incoterms® 2020 further articulates this obligation, demanding maximum insurance against diverse potential risks.
