Cost, Insurance and Freight (CIF)

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What Is CIF?

A CIF (Cost, Insurance and Freight) is an Incoterms 2020 rule for sea and inland-waterway shipments. Under CIF, the seller arranges and pays for the goods, export clearance, ocean freight and marine insurance to the named port of destination. The goods are delivered when they are on board the vessel at the origin port.

That last point matters: the seller pays the main carriage, but the buyer carries the risk during it. If cargo is lost or damaged after it goes on board at the origin port, the buyer makes the insurance or carrier claim, even though the seller selected the vessel and bought the freight.

CIF also has a minimum insurance rule. The seller buys cargo insurance for the buyer. The insured amount must be at least 110% of the contract value in the sale currency — for example, a $10,000 contract needs at least $11,000 of cover. The extra 10% is the standard margin built into the CIF insurance rule.

Unless the sale contract asks for more, the seller only has to buy basic cargo insurance. This protects against major transport accidents, such as fire, sinking or collision. It is not full protection for every possible problem with the goods. If the contract asks for broader insurance, that broader requirement replaces the basic default.

Even with insurance in place, CIF does not include import clearance, duties, VAT, destination charges or delivery beyond the agreed destination port.

In a CIF quote, ask which destination charges are excluded. The seller pays the freight and basic insurance, but the buyer still needs to handle import clearance and any local charges after arrival.

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