GLOSSARY
CIF (Cost, Insurance and Freight)
An Incoterms 2020 sea-and-inland-waterway rule where the seller pays cost, insurance, and freight to the named port of destination, with risk transferring on board.
Cost, Insurance and Freight (CIF) is an Incoterms 2020 rule limited to sea and inland-waterway transport. The seller delivers goods on board the vessel, pays cost and freight to the named port of destination, and procures minimum-cover marine insurance for the buyer's risk during carriage.
Why it matters
CIF and CFR split cost and risk asymmetrically: the seller pays freight (and, under CIF, insurance) all the way to destination, but risk transfers when the goods are on board at origin. This catches buyers off guard when cargo is damaged in transit and they discover the seller's insurance covers only the minimum Institute Cargo Clauses (C). Buyers needing fuller protection should arrange supplementary cover or negotiate a higher level in the contract.
CIF is appropriate only for bulk and break-bulk shipments. For containers, the ICC recommends CIP instead — the multimodal equivalent that delivers risk transfer at the carrier handover point rather than vessel loading.