CIP Incoterm: Carriage and Insurance Paid To (Incoterms 2020)

CIP at a glance

CIP is CPT plus a seller insurance obligation — and since Incoterms 2020, the default is all-risks cover (Institute Cargo Clauses A or equivalent). The seller pays carriage to the named destination; risk still passes at the first carrier.

Full term

CIP — Carriage and Insurance Paid To

Transport mode

Any transport mode

Delivery point

Handover to the first carrier at origin

Risk transfers

When the goods are handed to the first carrier at origin — the insurance, not the risk point, runs to destination

Export clearance

Seller

Import clearance

Buyer

What CIP means in practice

CIP answers the question CPT leaves open: who insures the journey? Under CIP the seller must buy cargo insurance for the buyer's benefit covering carriage to the named destination — and the 2020 revision set the default at the top of the market: Institute Cargo Clauses (A), the all-risks standard. That makes CIP's default cover materially stronger than CIF's minimum ICC (C).

The risk architecture is unchanged from CPT: risk passes to the buyer at the first-carrier handover at origin. The insurance is what protects the buyer across the journey the seller arranged. If cargo is damaged mid-route, the buyer claims on the seller-purchased policy — the seller's own liability ended at first pickup.

CIP has become the recommended pairing for high-value manufactured goods moving multimodally: electronics, pharmaceuticals, instruments, aerospace parts. The buyer gets a freight-inclusive price and genuine all-risks protection without operating its own marine insurance programme.

Buyer vs seller responsibilities

The all-risks default can be negotiated down by agreement — sellers of low-value robust cargo sometimes propose ICC (C) to trim premium. If you accept, do it consciously, in writing.

Where costs transfer — and where risk transfers

Cost transfer

The seller pays export costs, through-carriage to the named destination and the insurance premium for ICC (A)-level cover. The buyer pays destination costs the carriage contract excludes, import clearance, duties and any onward leg.

When comparing CIP against CPT-plus-own-insurance, buyers should compare like for like: the CIP premium buys a policy on the seller's terms (insurer, claims process, jurisdiction). Buyers with strong open policies sometimes prefer CPT and their own cover for exactly that control.

Risk transfer

Risk passes at the first-carrier handover at origin — identical to CPT. From that point the buyer is the party at risk, protected by the policy the seller was obliged to purchase.

Once again the C-rule split applies: cost runs to destination (freight and insurance both paid by the seller), risk transfers at origin. CIP softens the split's consequences with strong insurance; it does not eliminate the split.

When CIP works well

• High-value manufactured goods — electronics, medical devices, instruments — moving multimodally, where all-risks cover is non-negotiable.
• Buyers without their own cargo insurance programme who want the strongest default protection bundled by the seller.
• Air freight of sensitive goods where the seller controls the forwarder relationship and the buyer wants insurance certainty.
• Container shipments replacing legacy CIF terms — same commercial feel, correct risk point, far stronger default cover.

When to think twice about CIP

• Buyers with excellent open cargo policies who would rather control insurer, claims handling and cover terms — CPT or FCA keeps insurance on their side.
• Deals where the buyer needs the seller to bear risk until arrival — insurance is compensation, not accountability; DAP/DPU put arrival risk on the seller.
• Low-value robust cargo where all-risks premium is disproportionate — either agree reduced cover explicitly or use CPT.
• Buyers who want carrier control on the main leg — CIP leaves routing and carrier choice with the seller.

CIP in the real world

Medical devices Zurich → Singapore, claim on the seller's policy

A Singapore hospital group buys imaging equipment from a Swiss manufacturer at "CIP Singapore, consignee's facility (Incoterms 2020)". The manufacturer books multimodal carriage (truck–air–truck) and, as required, insures the journey at ICC (A) level for 110% of the contract value, naming the buyer as beneficiary.

At Changi, handlers discover shock-indicator labels triggered on one crate; calibration checks confirm transit damage somewhere en route. Risk had passed in Zurich at first pickup, so this is the buyer's loss — but the all-risks policy responds without the buyer needing to prove which leg caused the damage, and the claim settles at invoice value plus the 10% uplift.

Under a CIF-style minimum-cover policy, unexplained handling damage would likely have been excluded. The insurance clause — not the freight — was the decisive line in this contract.

Common mistakes with CIP

TradeIntel insight

The 2020 upgrade quietly made CIP one of the most buyer-protective rules available — all-risks cover at the seller's cost, on any mode, with the correct container-era risk point. In sourcing negotiations it is often easier to move a supplier from CIF to CIP than to FCA: the seller keeps its freight margin and document control, while the buyer gains a dramatically better policy. When a supplier resists, ask for their current insurance certificate — the comparison usually makes the argument for you.

Is CIP right for your shipment?

Answer eight questions about your shipment and capability profile — the TradeIntel Incoterms Assessment explains which rules fit and why.

Check with the Incoterms Assessment

Frequently asked questions

Related Incoterms guidance

• Incoterms hub: all 11 rules
• CIF vs CIP
• FOB vs CIF
• Incoterms for container shipping: choosing rules that match the box
• Incoterms costs and risks: who pays, who bears, and why they differ
• Incoterms Assessment