GlossaryEN1 min readUpdated: Jun 26, 2026
Incoterms risk transfer
In an international sales transaction, the chosen Incoterms rule pinpoints exactly where the risk of loss or damage to the goods passes from seller to buyer.
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Source: https://iccwbo.org/business-solutions/incoterms-rules/
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Incoterms 2020 Simulator: Who bears costs & risk?
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Definition & Explanation
In an international sales transaction, the chosen Incoterms rule pinpoints exactly where the risk of loss or damage to the goods passes from seller to buyer. Under EXW, risk transfers as soon as goods are made available at the seller's premises; under FOB and FCA, at the moment of handover to the main carrier at origin. Under CIF and CFR, risk also transfers at origin — yet with CIF the seller still owes a transport insurance policy to the destination port, creating a deliberate split between cost and risk. Under DAP, DPU, and DDP, risk passes only at the named destination. Knowing this transfer point precisely is essential for cargo insurance cover and any subsequent liability claim.
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⚖️ ICC Incoterms 2020
Incoterms 2020 Simulator: Who bears costs & risk?
Analyze all 11 Incoterms 2020: cost matrix, risk timeline, insurance gap detector and customs responsibility – free, no login required.
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