In one sentence
CIP (Carriage & Insurance Paid To) is an Incoterm where the seller pays for carriage and arranges marine/cargo insurance to the named destination. Risk transfers from seller to buyer once the goods are handed to the first carrier at origin. Crucially, since Incoterms 2020, CIP requires the seller to arrange comprehensive Institute Cargo Clauses (A) all-risks cover — much better than CIF's minimum ICC (C).
CIP responsibility — who does what
| Activity | Seller | Buyer |
|---|---|---|
| Goods, packing, commercial invoice | Yes | — |
| Loading at origin | Yes | — |
| Export clearance | Yes | — |
| Main carriage (any mode) to destination | Yes | — |
| Marine/cargo insurance (ICC A required) | Yes | — |
| Risk in transit | — | Yes (from first carrier) |
| Destination charges | — | Yes |
| Import clearance, duty, VAT | — | Yes |
| Delivery to door | — | Yes |
The Incoterms 2020 ICC (A) upgrade — why it matters
Before Incoterms 2020, both CIF and CIP only required minimum insurance under Institute Cargo Clauses (C) — a basic "named perils" policy. ICC (C) doesn't cover most everyday losses: theft, pilferage, water damage, contamination, breakage from rough handling.
Incoterms 2020 raised the bar for CIP only: it now requires ICC (A) — the broadest "all risks" cover available. CIF still requires only ICC (C) (a deliberate decision by the ICC, recognising that CIF is dominated by commodity trades where buyers carry their own cover).
This makes CIP a significantly safer term for the buyer than CIF, especially for higher-value manufactured goods where damage and pilferage are real risks. If the seller is paying for insurance anyway, getting ICC (A) cover instead of ICC (C) is a major win.
When CIP makes sense
- Containerised cargo where seller arranges freight — the technically correct alternative to CIF, with much better insurance built in
- Airfreight with seller-paid freight — much more common than CIF for air shipments
- UK importers without their own marine policy who want freight and insurance bundled in
- High-value goods where the ICC (A) "all risks" cover materially reduces your exposure
- LC trades requiring both freight prepaid AND insurance documents — CIP delivers both in one term
When CIP isn't the right choice
- You have your own UK marine cargo policy at better rates — use CPT instead and pay your own insurer
- You want full freight control — use FCA and arrange both freight and insurance independently
- Bulk and breakbulk commodities — CFR or CIF are traditional here
Worked example — CIP Birmingham
You buy a container of high-value pharmaceuticals CIP Birmingham from a German supplier:
- Goods + multimodal freight (rail + road) Hamburg → Birmingham + ICC (A) insurance: £42,000
- UK destination charges + clearance: £350
- UK import duty (0% — UK-EU TCA preference, with valid statement on origin): £0
- VAT via PVA: £0 cash, £8,400 on the VAT return
- Total cash landed cost: ~£42,350
If en route the goods are damaged by a forklift incident during multimodal transfer, ICC (A) cover applies — claim with seller's insurer. Under CIF, ICC (C) cover would not respond to this.
Common CIP mistakes
- Specifying Incoterms 2010 (or earlier) and getting ICC (C) — always reference "Incoterms 2020" in contracts to get the higher insurance cover
- Assuming CIP includes destination charges — it doesn't. Destination handling, customs, duty and VAT are all the buyer's responsibility
- Vague named destination — "CIP UK" is meaningless. Use "CIP Birmingham, buyer's warehouse"
- Not checking the actual policy — verify the seller has placed ICC (A) cover, not just ticked a box. Ask for the certificate
Verdict
If you're buying containerised cargo internationally and you want the seller to arrange freight and insurance, CIP is significantly better than CIF — same convenience, much better insurance cover under Incoterms 2020.
Suppliers may quote CIF by habit; ask for CIP instead and reference Incoterms 2020. The price difference is usually nil, and you get ICC (A) all-risks cover into the bargain.