What is CIP?
CIP, or Carriage and Insurance Paid to, is a term describing when a seller pays freight and insurance costs, to deliver goods to a seller-appointed party at an agreed-upon location. This term is of almost identical meaning to CPT, except in CIP, the seller is required to purchase insurance for goods during transit.
CIP requires the seller to ensure the goods at 110% of the sale contract value, under at least the minimum cover of the Institute Cargo Clauses of the Institute of London Underwires —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.
When should CIP be used?
CIP can be used for all modes of transport, whereas the Incoterm CIF can only be used for non-containerized ocean shipments.
When does the seller’s obligation end according to CIP?
CIP mandates that the risk of damage or loss to the goods being transported transfers from the seller to the buyer as soon as the goods are delivered to the carrier or appointed person. It is comparable but different in Cost, Insurance and Freight (CIF).