Today I want to mention the differences between CIF Incoterms and CIP Incoterms according to latest ICC rules of international commercial terms.
CIF and CIP are the only incoterms, which regulates the insurance coverage of the transaction.
Under these two incoterms, exporters obligated to supply an insurance policy to importers.
First of all let me make the definitions of both trade terms according to current incoterms rules:
- Definition of CIF according to Incoterms 2010: “Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered.
- Definition of CIP according to Incoterms 2010: “Carriage and Insurance Paid to” means that the seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such place is agreed between the parties) and that the seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.
Differences between CIF and CIP:
Mode of Transport
- CIF incoterms can only be used with port-to-port sea transportation.
- CIP incoterms can be used with any mode of transport including sea, land, air, rail and multimodal transportation.
- Under CIF Incoterms 2010 exporter delivers the goods on board the vessel at the port of loading.
- Under CIP Incoterms 2010 exporter delivers the goods to the carrier or another person nominated by the seller at an agreed place if any such place is agreed between the parties.