# Insurance obligation under Incoterms

*Last updated: 2026-06-26*

> Under Incoterms, an obligation to arrange transport insurance does not apply across the board — it is limited to two terms: CIF (Cost, Insurance and Freight) and CIP (Carriage and Insurance Paid).

Under Incoterms, an obligation to arrange transport insurance does not apply across the board — it is limited to two terms: CIF (Cost, Insurance and Freight) and CIP (Carriage and Insurance Paid). Only under these two rules must the seller procure a policy with minimum coverage and include the premium in the contract price. Since Incoterms 2020, the minimum coverage required under CIP is broader than that prescribed under CIF. For all other terms — FOB, FCA, DAP, DPU, and the rest — the seller has no insurance duty; the buyer may arrange cover independently or accept the risk. A common misconception conflates two distinct concepts: the seller's liability for damage up to the risk transfer point, and the contractual duty to purchase insurance. Taking out cargo insurance is commercially prudent in any case; it is legally mandatory only under CIF and CIP.

**Source:** [https://iccwbo.org/business-solutions/incoterms-rules/](https://iccwbo.org/business-solutions/incoterms-rules/)

## Quick Facts

| Property | Value |
|---|---|
| Term | Insurance obligation under Incoterms |
| Language | EN |
| Word count | 143 |
| Last updated | 2026-06-26 |
| Source | https://iccwbo.org/business-solutions/incoterms-rules/ |

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