What is CIF ?
CIF, or Cost Insurance & Freight, is a term used to describe an expense paid by the seller to cover the costs, insurance, and freight against the possibility of loss or damage to a buyer’s order, while it is in transit to an export port named in the sales contract.
CIF is nearly identical to CFR (Cost & Freight), but also holds the responsibility of purchasing insurance for the goods, while in transit to the named port of destination. CIF requires the seller to insure the goods for 110% of the value under at least the minimum cover of the Institute Cargo Clauses of the Institute of London Underwriters —Institute Cargo Clauses ( C). The policy must be in the same currency as the contract of sale of goods.
The seller must also turn over the documents necessary to obtain the goods from the carrier or to file a claim against the insurer. These documents usually include the invoice, the insurance policy, and the bill of lading.
When does the seller’s obligation end, according to CIF?
According to CIF, the seller’s obligation ends when the documents are handed over to the buyer.
When should CIF be used?
CIF should only be used for non-containerized ocean freight, with any other mode of transport, the Incoterm CIP would apply.