Incoterms
What is CIF?
Learn CIF (Cost, Insurance and Freight) — seller duties, insurance minimums, risk transfer, and pricing for sea exports.
Under CIF the seller pays cost, main carriage freight, and minimum marine insurance to the named port of destination; risk passes on loading at origin.
Meaning and When to Use CIF
CIF (Cost, Insurance and Freight) is an Incoterms® 2020 rule for international trade. CIF applies to sea and inland waterway transport only.
Always state the full format in contracts — e.g. "CIF Shanghai, Incoterms® 2020" — not the acronym alone.
Choose CIF based on who can best arrange carriage, insurance, and import clearance.
Division of Responsibilities, Risk, and Cost
Under CIF, responsibilities typically split as follows:
- Seller: Deliver goods on board at port of shipment
- Seller: Pay main carriage to named destination port
- Seller: Procure minimum marine insurance
- Seller: Provide commercial invoice and export documents
- Buyer: Pay import duties and destination charges
- Buyer: Bear risk from loading onward
- Buyer: Accept seller's transport document
Risk transfers when goods are on board at the port of shipment — same point as FOB, but the seller must provide insurance cover.
Pricing and Cost Practice
CIF price = FOB elements + ocean freight + insurance premium. Disclose currency, destination port, and whether insurance is ICC C or broader cover.
Use the CIF Calculator to split components for buyer analysis.
Documents and Compliance
CIF shipments require commercial invoice, packing list, bill of lading, and insurance certificate/policy. Invoice must show CIF value and Incoterms® 2020 with named destination port.
Examples
Example — Machinery CIF Rotterdam
FOB elements USD 80,000 + freight USD 4,500 + insurance USD 650 = CIF Rotterdam USD 85,150.
Example — Buyer checks insurance
Buyer verifies ICC C cover and may buy top-up war risk or higher deductible coverage separately.
FAQ
- What insurance must the seller provide under CIF?
- Minimum cover per Institute Cargo Clauses C or equivalent unless the contract requires broader terms.
- When does risk pass under CIF?
- When goods are on board the vessel at the port of shipment — buyer bears loss/damage from that point.
- Is CIF used for air freight?
- No — CIF is for sea/inland waterway; air uses CIP (Carriage and Insurance Paid To).
- How is CIF value used for customs?
- Many countries use CIF (or CIP) value as the basis for duty calculation at import.
- Can the buyer refuse seller's insurer?
- The seller must provide cover acceptable under the contract; buyers often specify minimum clauses in purchase orders.
Conclusion
CIF bundles freight and minimum insurance into the seller's quote. Pair this guide with the CIF Calculator and FOB vs CIF comparison for complete quoting.