Incoterms
CIF vs CFR: Insurance Difference
CFR excludes insurance; CIF adds minimum marine cover — compare seller duties and buyer gaps.
CFR seller pays freight only; CIF seller pays freight plus minimum insurance to destination port.
Key Differences at a Glance
CFR (Cost and Freight) and CIF both require the seller to pay main carriage to the destination port.
Seller vs Buyer Obligations
CFR: freight only. CIF: freight + minimum marine insurance.
Under CFR the buyer must insure from loading; under CIF seller provides minimum cover.
Risk Transfer and Cost Structure
Risk passes on board at shipment port for both rules.
CIF quotes include insurance premium; CFR looks cheaper but buyer adds insurance cost.
Which Term to Choose
Use CIF when buyers expect seller-arranged cover. Use CFR when buyer has blanket cargo insurance.
Examples
Example — CFR + buyer policy
CFR USD 52,000 + buyer ICC A premium USD 450 vs CIF USD 52,380 all-in.
Example — Letter of credit
LC requires insurance certificate — CIF simplifies document set.
FAQ
- Does CFR include insurance?
- No — buyer insures unless contract states otherwise.
- Is risk the same under CFR and CIF?
- Yes — on board at port of shipment under Incoterms® 2020.
- Which is better for bulk commodities?
- CFR is common when buyers have established marine insurance programs.
- Can CFR be used for containerized cargo?
- Yes for sea/inland waterway to named port.
- How to quote CFR from FOB?
- Add ocean freight; CIF adds freight plus insurance on top of FOB elements.
Conclusion
The insurance gap defines CFR vs CIF. Use CFR and CIF calculators to compare.