CIF — Cost, Insurance and Freight
CFR plus a minimum insurance policy the seller buys for the buyer's benefit. Risk still passes at origin.
- Group
- C — Main carriage paid
- Transport mode
- Sea and inland waterway only. Delivery is measured against a vessel, so it does not describe a container handover.
- Named place
- The port of destination the seller has paid the freight and insurance to.
- Main carriage paid by
- Seller
- Risk passes
- On board at the origin port
- Export clearance
- Seller
- Import clearance and duties
- Buyer
- Seller must insure
- Minimum Institute Cargo Clauses (C)
- Unloading at destination
- Buyer.
CIF is CFR with one addition: the seller must take out cargo insurance covering the buyer's risk during the main carriage, and hand over the policy or certificate. Risk passes on board at the origin port exactly as under CFR, so what the buyer receives is not protection from risk but a policy with which to claim.
The cover required is minimum — Institute Cargo Clauses (C), a narrow named-perils wording. It covers major casualty events such as fire, stranding, sinking and collision. It does not cover theft, non-delivery, water damage in the ordinary course, or most handling damage. Buyers routinely assume CIF means insured and discover the gap at the claim.
Incoterms 2020 raised CIP's insurance requirement to Institute Cargo Clauses (A), all risks, but deliberately left CIF's at (C), on the reasoning that CIF is used for bulk commodity trades where (C) is the market norm. So the two insurance rules now differ, and the difference is easy to miss.
If you need real cover under CIF, agree a higher level in the sales contract in as many words. The default is ICC (C), and a container stolen from a yard is not an ICC (C) claim.
Always write the rule with its named place and the version — CIF [named place], Incoterms 2020. The rule says nothing about when ownership transfers; that is for your sales contract.