Incoterms 2020 · Sea and inland waterway
CIF (Cost, Insurance and Freight): who pays what
The short answer
Who pays what under CIF
| Step | Under CIF |
|---|---|
| Export clearance | Seller |
| Main freight | Seller |
| Cargo insurance | Seller (Clauses C, at least 110%) |
| US customs clearance | Buyer |
| US import duty and fees | Buyer |
| Unloading at destination | Buyer (unless the carriage contract includes it) |
| Risk passes to the buyer | When the goods are on board the vessel at the port of loading |
In the contract, CIF is followed by the port of destination the seller pays freight and insurance to: for example "CIF Savannah, Incoterms 2020".
What CIF means for a US importer
CIF is a sea-only rule. The minimum Clauses (C) cover pays for major casualties such as fire, sinking or a collision, not for theft, rain damage or rough handling. If you want all-risks cover, ask for Clauses (A) in the contract or insure the goods yourself.
As under CFR, the seller controls the carrier and the sailing, and US destination charges are often billed to the buyer at arrival.
US customs value under CIF
A CIF price includes freight and insurance. The US customs value leaves both out (19 U.S.C. 1401a(b)(4)(A)), so your broker deducts them when they are shown on the invoice or documented. Countries that value imports CIF, such as the EU, include them.
Check the duty for your product in the Gateway tariff calculator.
Watch out for
- Ask for the insurance certificate before the goods sail, and check that claims can be made in the United States.
CIF questions
What insurance does CIF require?
Under Incoterms 2020, at least Institute Cargo Clauses (C) or similar, for 110% of the contract price. The parties can agree more cover.
Is US import duty charged on the CIF value?
No. The United States charges duty on the value without international freight and insurance, so those parts of a CIF price are deducted when they are shown separately.
What is the difference between CIF and CIP?
CIF is for sea transport only and requires minimum Clauses (C) cover; CIP works for any mode and requires broader Clauses (A) cover.
Sources
- International Chamber of Commerce: Incoterms 2020
- International Trade Administration (trade.gov): Know Your Incoterms
- 19 U.S.C. 1401a(b)(4)(A): price actually paid or payable
Incoterms® is a registered trademark of the International Chamber of Commerce. This page explains the rule in our own words; the ICC publication is the authoritative text.