CIF: Cost, Insurance and Freight (Incoterms® 2020)
CIF works like CFR, plus the seller must buy cargo insurance for the buyer's benefit: at least minimum ICC (C) cover for 110% of the contract value.
Quick facts
How to write it
CIF + the named port of destination + Incoterms 2020, for example: CIF Mombasa Incoterms 2020.
What the seller does
- Clears the goods for export.
- Contracts and pays sea freight to the named port of destination.
- Buys cargo insurance on at least ICC (C) terms for 110% of the contract value, in the contract currency.
- Gives the buyer the bill of lading and the insurance policy or certificate.
What the buyer does
- Takes the risk once the goods are on board at the port of shipment, protected by the seller's insurance.
- Claims directly from the insurer if the goods are lost or damaged.
- Pays unloading and destination charges not included in the freight.
- Clears the goods for import and pays duties and taxes.
When to use it
CIF is common for commodities and for sales paid by letter of credit, where the bank wants to see an insurance document. It is for sea and inland waterway only; for containers the ICC recommends CIP.
Common mistakes
- Assuming all-risks cover. CIF only requires minimum ICC (C) cover; if the buyer wants ICC (A), agree it in the contract.
- Using CIF for air freight or courier shipments, where it does not apply. Use CIP.
- Insurance in a different currency from the contract or below 110% of the value.
CIF vs CIP
CIF is sea only and needs minimum ICC (C) cover. CIP works for any mode, including containers and air, and needs all-risks ICC (A) cover.
A plain-language summary of Incoterms® 2020 for everyday use. The full rules are published by the International Chamber of Commerce (ICC), and your contract wording decides. Incoterms® is a registered trademark of the ICC.
All 11 Incoterms 2020 rules
Common questions
What insurance does CIF require?
Cargo insurance on at least Institute Cargo Clauses (C) terms for 110% of the contract value, in the contract currency, covering the goods from delivery to at least the port of destination.
When does risk pass under CIF?
When the goods are on board the ship at the port of shipment. The seller pays the freight and insurance to the destination, but any damage at sea is claimed by the buyer from the insurer.