GlossaryEN1 min readUpdated: Jun 24, 2026

Incoterms® Risk Transfer Points

Freight forwarders, cargo insurers, and trade lawyers rely on Incoterms® risk transfer points to establish precisely who held the risk at the exact moment goods were lost or damaged.

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Last updated: 24 June 2026Published: 19 June 2025

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

Freight forwarders, cargo insurers, and trade lawyers rely on Incoterms® risk transfer points to establish precisely who held the risk at the exact moment goods were lost or damaged. Each Incoterms® rule defines a specific triggering event – handover to the first carrier, loading on board a vessel, or delivery at the named destination – at which risk passes from seller to buyer. The distinction that catches many traders off guard: risk transfer and cost allocation do not always coincide. Under CIF, the seller arranges and pays for cargo insurance to the destination port, yet risk passes to the buyer as soon as the goods are handed to the carrier at the port of shipment. Overlooking this split can leave a buyer exposed without realising it, or generate costly liability disputes after the fact. In customs practice, risk transfer points also feed into customs value calculation, which is typically based on the transaction value up to the point of entry into the importing country.

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