CIF
Cost, Insurance and FreightCIF
Incoterms 2020
Sea / inland waterway
When goods pass the ship's rail at port of shipment (NOT at destination)
Cost responsibility
Seller pays freight and insurance to destination port. Risk transfers at loading port.
Seller obligations
- S1Export clearance
- S2Main sea freight
- S3Marine insurance (minimum Institute Cargo Clauses C — basic coverage)
- S4Loading onto vessel
Buyer obligations
- B1Import clearance
- B2Import duties and taxes
- B3Unloading at destination
When to use CIF
When buyer wants the seller to arrange both freight and insurance for sea shipments. Very common in international trade, especially for letter of credit transactions where banks require CIF pricing.
When NOT to use CIF
When buyer wants higher insurance coverage (CIF only requires minimum Clause C; consider CIP which requires Clause A under 2020 rules). Multi-modal transport. Container shipments picked up inland.
Common mistakes with CIF
- !Assuming CIF insurance covers all risks — it only requires minimum coverage (Clause C)
- !Not realizing CIP (multi-modal equivalent) now requires higher insurance coverage than CIF under Incoterms 2020
- !Using CIF for air freight or road transport