CIP (Carriage and Insurance Paid To)

CIP is a C-rule, so it has the characteristic split between cost and risk. On cost, the seller pays for carriage all the way to the named destination and must buy insurance covering the goods to that destination. On risk, however, the transfer happens much earlier: risk passes to the buyer the moment the goods are handed over to the first carrier — which could be a trucking company collecting from the seller's warehouse, long before the goods reach the destination.

This early risk transfer is exactly why the seller's insurance obligation matters. Because the buyer bears the risk for almost the entire journey while the seller is paying the freight, the insurance the seller buys protects the buyer throughout that period. Without it, the buyer would carry risk on a journey it neither arranged nor paid for.

On arrival at the destination, the buyer takes over import responsibilities: customs clearance, import duty and import VAT all fall to the buyer. CIP does not cover those.

The biggest change to CIP in Incoterms 2020 concerns insurance. Previously CIP only required minimum cover, but the 2020 revision raised the bar: under CIP the seller must now buy comprehensive insurance — Institute Cargo Clauses (A), which is broadly all-risks cover. This was done because CIP is often used for high-value manufactured goods, where minimum cover was inadequate.

This is now the key distinction between CIP and its sea-freight sibling CIF. CIF still only requires minimum Clauses (C) cover, while CIP requires comprehensive Clauses (A) cover. So for valuable goods shipped multimodally, CIP gives the buyer markedly better insurance protection than CIF does — a meaningful difference when choosing between the two.