ovrseasCIF: Cost, Insurance and Freight
C-group rule · sea and inland waterway only · Incoterms® 2020
CIF (Cost, Insurance and Freight) means the seller pays the sea freight to the named port of destination and buys cargo insurance for the buyer. Risk still passes to the buyer once the goods are on board at the port of shipment.
- Risk passes
- When the goods are loaded on board at origin — same as CFR.
- Main freight
- Paid by the seller
- Insurance
- The seller buys minimum (C) cover for the buyer
- Customs
- Export: Seller · Import: Buyer
Who pays what under CIF
| Export clearance | Seller |
|---|---|
| Carriage to port / terminal | Seller |
| Loading onto main carriage | Seller |
| Main carriage (freight) | Seller |
| Insurance | Seller |
| Unloading at destination | Buyer Unless unloading is included in the seller’s carriage contract (liner terms, door-to-door rates) — then the seller pays it and cannot charge it on. |
| Import clearance | Buyer |
| Duties and import taxes | Buyer |
How to write CIF on your documents
The rule is only complete with its named place. The port of destination the seller pays freight and insurance to.
CIF Hamburg, Germany — Incoterms® 2020
Write it the same way on the quotation, the proforma, the commercial invoice and the shipping instructions — a different place on one document is a different deal.
Use CIF when
- Sea shipments where the buyer, or its bank under a letter of credit, wants the seller to arrange freight and insurance.
- Bulk and break-bulk cargo loaded directly onto the vessel.
Think twice when
- Containers or any mode other than sea — use CIP.
- The buyer expects broad cover: CIF only requires the minimum (C) cover unless the contract asks for more.
The required cover is the minimum level, not all-risks. Buyers who assume they are fully covered find out at claim time.
Questions about CIF
- What does CIF mean in shipping?
- CIF (Cost, Insurance and Freight) means the seller pays the sea freight to the named port of destination and buys cargo insurance for the buyer. Risk still passes to the buyer once the goods are on board at the port of shipment.
- Where does risk pass under CIF?
- When the goods are loaded on board at origin — same as CFR.
- Who pays the freight under CIF?
- The seller pays the main carriage — even though risk has already passed to the buyer at origin.
- Who pays import duties under CIF?
- The buyer. Import clearance, duties and taxes are the buyer’s under every rule except DDP.
- Can CIF be used for containers or air freight?
- CIF is written for sea and inland waterway transport. For containers the goods usually leave the seller at a terminal, so CIP normally fits better; for air it does not apply.
- What insurance does the seller have to buy under CIF?
- At least the minimum cover — Institute Cargo Clauses (C) or similar — for at least 110% of the contract price, in the contract currency. The buyer can ask for more in the contract, usually at its own cost. Under CIP the 2020 rules require the broader (A) cover instead.
The documents where CIF is written
- Commercial invoice template
Customs and the buyer’s bank read the Incoterm here; it decides which costs belong in the invoice value.
- Proforma invoice template
The buyer opens a letter of credit or pays a deposit on these terms — the same rule must follow through.
- Quotation template
A price means nothing without its rule: «USD 12.50 FOB Busan» and «USD 12.50 DAP Dallas» are different offers.
Compare CIF with
Incoterms® is a registered trademark of the International Chamber of Commerce. This page is an independent summary of how costs and risk are allocated and is not affiliated with or endorsed by ICC. For contract drafting, use the official Incoterms® 2020 rules published by ICC.