CIP Incoterms: What Carriage and Insurance Paid To
Means for E-Commerce Sellers (2026)

What Is CIP (Carriage and Insurance Paid To)?

CIP is one of 11 Incoterms published by the International Chamber of Commerce (ICC). It works with any mode of transport: air, ocean, multimodal, or rail.

Under CIP, the seller does three things:

1. Arranges carriage to the named destination (not just to a port, but to any agreed place)
2. Pays for freight to that destination
3. Provides all-risks insurance covering the cargo from origin to destination

The buyer handles:

• Import customs clearance
• Import duties and taxes
• Unloading at the destination
• Any costs caused by customs delays

CIP sits between FOB (where you handle freight, insurance, and customs) and DDP (where the carrier handles everything). The seller covers transport and provides strong insurance, but customs and duties remain with you.

For a full explanation of DDP, see our DDP shipping guide.

Key Takeaway: CIP = seller pays freight + all-risks insurance to destination. You handle customs and duties. The insurance is the strongest default of any Incoterm.

The 2020 Insurance Upgrade: Why CIP Changed

This is the most important change the ICC made to any Incoterm in the 2020 revision.

Before 2020, both CIF and CIP required Institute Cargo Clauses (C), the minimum insurance level. Clauses (C) covers only catastrophic events: vessel sinking, fire, collision. It does not cover theft, water damage, rough handling, or individual package loss.

In Incoterms 2020, the ICC split CIF and CIP:

Insurance Coverage	CIF (unchanged)	CIP (upgraded in 2020)
Institute Cargo Clauses	(C) Minimum	(A) All-risks
Vessel sinking, fire, collision	Covered	Covered
Theft and pilferage	NOT covered	Covered
Water damage	NOT covered	Covered
Breakage from rough handling	NOT covered	Covered
Individual package loss	NOT covered	Covered
Minimum coverage value	110% of contract value	110% of contract value

Why did the ICC upgrade CIP but not CIF? Because CIF is primarily used in commodity trading (oil, grain, metals) where Clauses (C) is the established industry standard and changing it would disrupt existing practices. CIP is used for manufactured goods and containerized cargo where buyers need broader protection.

For e-commerce sellers shipping manufactured products from Asia, CIP's insurance is significantly better than CIF's. However, you still handle customs and duties, which is where DDP wins.

Key Takeaway: CIP is the only Incoterm that requires all-risks insurance by default. If insurance coverage matters and you want the seller to arrange it, CIP is the strongest option.

CIP vs CIF vs CPT: Which "C" Term Do You Need?

The four "C" Incoterms (CPT, CIP, CFR, CIF) all share one feature: the seller arranges and pays for carriage. Here is how they differ:

Factor	CPT	CIP	CFR	CIF
Full name	Carriage Paid To	Carriage and Insurance Paid To	Cost and Freight	Cost, Insurance and Freight
Transport mode	Any	Any	Ocean freight only	Ocean freight only
Seller pays freight	Yes	Yes	Yes	Yes
Seller provides insurance	No	Yes (Clauses A)	No	Yes (Clauses C)
Insurance level	N/A	All-risks	N/A	Minimum only
Risk transfers	At first carrier	At first carrier	On board vessel	On board vessel
Buyer handles customs	Yes	Yes	Yes	Yes
Best for	Buyers who arrange own insurance	High-value goods needing strong coverage	Ocean freight commodity trade (no insurance)	Ocean freight commodity trade (with basic insurance)

CIP vs CPT

CIP and CPT are identical except for insurance. Choose CIP when you want the seller to arrange all-risks insurance. Choose CPT when you prefer to arrange your own insurance policy (which may offer better terms or higher coverage). See CPT Incoterms.

CIP vs CIF

CIP is better for containerized and manufactured goods. CIF is the standard for maritime commodity trading. If your supplier quotes CIF and you want better insurance, ask them to quote CIP instead or arrange supplemental Clauses (A) coverage yourself. See CIF Incoterms.

CIP vs DDP

CIP covers freight and insurance but stops at customs. DDP covers everything including customs clearance and duty payment. For e-commerce sellers who want the simplest possible setup, DDP eliminates the remaining customs burden that CIP leaves with you.

What You Handle	CIP	DDP
Freight	Seller pays	Carrier pays
Insurance	Seller pays (Clauses A)	Carrier provides coverage
Customs clearance	You	Carrier
Duties and taxes	You	Carrier (included in price)
Customs broker	You need one	Not needed
Customs bond (US)	You need one	Not needed
Total vendors	2-3	1

CIP Responsibilities Breakdown

Seller's Obligations Under CIP

Obligation	What It Means
A1: General	Provide goods and commercial invoice
A2: Delivery	Deliver goods to the first carrier at the named place of shipment
A3: Risk transfer	Risk passes when goods are delivered to the first carrier
A4: Transport	Arrange and pay for carriage to the named destination
A5: Insurance	Arrange and pay for insurance under Institute Cargo Clauses (A). Minimum 110% of contract value. Buyer named as insured.
A6: Transport document	Provide usual transport document for the agreed carriage
A7: Export clearance	Handle export formalities
A8: Checking/packaging	Package goods for transport
A9: Cost allocation	Pay all costs to destination, including freight and insurance. Not import duties.
A10: Notices	Notify buyer of dispatch and insurance details

Buyer's Obligations Under CIP

Obligation	What It Means
B1: General	Pay the agreed price
B2: Taking delivery	Accept delivery at the named destination
B3: Risk transfer	Bear risk from delivery to the first carrier (despite seller paying freight to destination)
B4: Transport	No obligation (seller arranges)
B5: Insurance	Accept seller's insurance. May arrange additional coverage above 110% if needed.
B6: Transport document	Accept the transport document
B7: Import clearance	Handle ALL import customs, duties, and taxes
B8: Inspection	Pay for inspection if required
B9: Cost allocation	Pay import duties, taxes, customs fees, and unloading
B10: Notices	Notify seller of any destination requirements

Critical note on risk: Under CIP, the seller pays for freight and insurance to the destination, but risk transfers when goods reach the first carrier at origin. This means if your cargo is damaged during transit, you file a claim against the insurance policy (which the seller arranged but you are the named beneficiary), not against the seller.

Common Mistakes with CIP

Mistake 1: Confusing CIP with door-to-door delivery.
CIP delivers to a named place, which could be a port, terminal, or address. But "delivery" under CIP means goods arrive ready for unloading. You unload. You clear customs. You pay duties. CIP is not DDP.

Mistake 2: Not checking the insurance policy details.
The seller is required to provide Clauses (A) insurance, but the specific policy exclusions, deductibles, and claim procedures vary by insurer. Ask your seller for a copy of the insurance certificate before shipment. Verify that you are named as the insured party and that the coverage value is at least 110% of the contract price.

Mistake 3: Assuming CIP risk stays with the seller until destination.
This is the most common CIP misunderstanding. The seller pays for freight AND insurance to the destination, but risk transfers at the first carrier. The seller arranged insurance to protect the buyer during transit, not the seller. If something goes wrong, the buyer files the insurance claim, not the seller.

Mistake 4: Using CIP when you actually need DDP.
If you want someone else to handle customs and duties, CIP is not enough. CIP covers transport and insurance. DDP covers transport, insurance, customs, and duties. For e-commerce sellers without customs infrastructure, DDP is the better fit.

Frequently Asked Questions

Related Incoterms and Resources