Incoterms 2020 · Any mode
CIP (Carriage and Insurance Paid To): who pays what
The short answer
Who pays what under CIP
| Step | Under CIP |
|---|---|
| Export clearance | Seller |
| Main freight | Seller |
| Cargo insurance | Seller (Clauses A, 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 handed to the first carrier, in the origin country |
In the contract, CIP is followed by the place of destination the seller pays carriage and insurance to: for example "CIP Dallas, Incoterms 2020".
What CIP means for a US importer
CIP is CPT plus insurance. Since Incoterms 2020 the seller must buy all-risks cover (Institute Cargo Clauses (A) or similar), not the minimum cover CIF requires.
The insurance protects you, because the goods travel at your risk from the first carrier on. Ask for the policy or certificate before the goods ship.
US customs value under CIP
A CIP price includes freight and insurance. Both are left out of the US customs value, so your broker deducts them when they are shown on the invoice or documented.
Check the duty for your product in the Gateway tariff calculator.
Watch out for
- Check that the policy names a claims agent you can reach in the United States and pays in the contract currency.
- As with CPT, the seller controls the carrier and the routing.
CIP questions
What insurance does CIP require?
Under Incoterms 2020, cover at the Institute Cargo Clauses (A) level or similar, for at least 110% of the contract price, in the contract currency.
What is the difference between CIP and CIF?
CIF is for sea and inland waterway only and requires the minimum Institute Cargo Clauses (C) cover; CIP works for any mode and requires the broader Clauses (A) cover. Risk passes earlier under CIP (at the first carrier) than under CIF (on board the ship).
Who pays US duty under CIP?
The buyer, as importer of record. CIP leaves import clearance and duty to the buyer.
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.