GlossaryEN1 min readUpdated: Jun 26, 2026

Carriage And Insurance Paid To

Under CIP (Carriage and Insurance Paid To), the seller pays freight to the named destination and arranges cargo insurance in the buyer's favour – but risk already passes to the buyer upon handover to the first carrier.

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Last updated: 26 June 2026Published: 27 January 2026

Source: https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/

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Incoterms 2020 Simulator: Who bears costs & risk?

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Definition & Explanation

Under CIP (Carriage and Insurance Paid To), the seller pays freight to the named destination and arranges cargo insurance in the buyer's favour – but risk already passes to the buyer upon handover to the first carrier. This split between cost/insurance obligation and risk transfer is the defining characteristic of CIP and often surprises buyers unfamiliar with Incoterms. Since Incoterms 2020, CIP requires coverage at the level of Institute Cargo Clauses A or equivalent, a significant upgrade from the previous minimum standard. CPT, by contrast, imposes no insurance obligation on the seller at all. In practice, freight forwarders must ensure the insurance certificate is issued and available to the buyer before shipment.

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