Understanding CIP Delivery Terms
CIP (Carriage and Insurance Paid To) is an Incoterm where the seller is required to arrange and pay for the carriage of goods to a named destination. Crucially, under CIP, the seller must also procure cargo insurance against the buyer's risk of loss or damage to the goods during transit. The seller contracts for and pays the insurance premium.
Seller's Obligations
- Providing the goods in conformity with the contract of sale.
- Arranging and paying for all export licenses, authorizations, and formalities.
- Contracting for the main carriage and the required insurance coverage.
- Covering all risks and costs until the goods are delivered to the first carrier.
- Providing the buyer with the transport document and the insurance policy or certificate.
Buyer's Obligations
- Taking delivery of the goods at the named destination.
- Handling all import-related licenses, customs clearance, and formalities.
- Paying for all import duties, taxes, and other charges.
- Assuming all risks of loss or damage from the point the goods are handed over to the first carrier.
Important Considerations for CIP
The buyer should be aware that under the CIP Incoterm (as per Incoterms 2020), the seller is required to obtain insurance coverage complying with Institute Cargo Clauses (A), which is a high level of cover. However, the parties can agree to a lower level of cover.
CIP is a versatile term and can be used for any mode of transport, including multimodal transport.