CIF Price – Cost, Insurance & Freight (CIF) Definition | TFG Shipping Guide

CIF Price - Cost, Insurance, Freight (CIF) Definition | TFG Shipping Guide

Trade Finance Global / Freight Forwarding / Incoterms® Rules 2019 (International Commerce Terms) / CIF Price – Cost, Insurance & Freight (CIF) Definition | TFG Shipping Guide

CIF Price – Cost, Insurance & Freight Incoterm®

It is important to have an understanding of Cost, Insurance and Freight (CIF) when shipping internationally. “Cost, Insurance and Freight”, also known as CIF, is also restricted to sea or inland waterway modes of transport. In this case, the seller insures the goods transported up until they arrive at the port, but it becomes the responsibility of the buyer (in terms of risk and insurance).

CIF Price – What is Cost, Insurance and Freight?

What is Cost, Insurance and Freight? CIF stands for Cost, Insurance and Freight – it’s a legal incoterm term which is used in international shipping for the delivery of goods to a port. In this case, the seller must pay for the delivery of goods, and their export, including insurance, and has responsibility of the goods right up until they’re loaded on the ship. CIF and FOB (Free on Board) are the most common shipping terms. The term CIF means that the seller has more responsibility; they will pay for and arrange transportation, freight duties and insurance. This can be contrasted with a seller under an FOB shipping transaction; where the seller is merely responsible for delivery of the goods to the port of origin; they will then be transported.

CIF and FOB (Free on Board) are the most common shipping terms.

Cost, Freight, Insurance

The term CIF means that the seller has more responsibility; they will pay for and arrange transportation, freight duties and insurance. This can be contrasted with a seller under an FOB shipping transaction; where the seller is merely responsible for delivery of the goods to the port of origin; they will then be transported.

Watch outs for importers and tips for CIF:

  • Your supplier has control of the insurance coverage – this means that the seller is likely to choose the cheapest / most basic insurance option for your product
  • Watch out for the beneficiary of the insurance policy – in the case of damages, if the seller is the beneficiary if your goods get damaged in transit, payment will go to them to then be reimbursed to you as the importer
  • CIF stops after the goods arrive at the port – if goods are damaged at the port or when unloaded, as well as any additional port or storage fees are incurred, this will be your responsibility
  • CIF could be more expensive – given that the seller invoices CIF, the costs might be inflated above the actual cost of insuring your goods

CIF: What are the critical issues?

CIF also has two critical issues as the risks passes from to the Buyer, just like it happens with  FOB or CFR, while the Seller, in addition to paying for the freight to carry the goods, not unloaded, to the named port of destination, shall subscriube at their expenses an insurance policy with minimum cover, against loss and / or damage of the goods, whose risk is the Buyer’s lead.

Incoterms – What are they?

Incoterms were created by the International Chamber of Commerce (ICC), a set of international trade guidelines recognised around the world. Incoterms are a universal language between buyers, sellers and shipping companies, and there are around 13 incoterms in international trade.

Watch outs and tips for CIF

  • Your supplier has control of the insurance coverage – this means that the seller is likely to choose the cheapest / most basic insurance option for your product
  • Watch out for the beneficiary of the insurance policy – in the case of damages, if the seller is the beneficiary if your goods get damaged in transit, payment will go to them to then be reimbursed to you as the importer
  • CIF stops after the goods arrive at the port – if goods are damaged at the port or when unloaded, as well as any additional port or storage fees are incurred, this will be your responsibility
  • CIF could be more expensive – given that the seller invoices CIF, the costs might be inflated above the actual cost of insuring your goods

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Meet our writer

Written by our resident freight forwarding and shipping expert.

Andrea Frosinini

Incoterms® Index

Ex Works EXW
Free Carrier FCA
Carriage Paid To CPT
Carriage and Insurance Paid To CPT
Delivery at Terminal DAT
Delivery at Place DAP
Delivery Duty Paid DDP
Free Alongside Ship FAS
Free on Board FOB
Cost and Freight CFR
Delivery Duty Unpaid DDU
Cost Insurance and Freight CIF

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