CIP, short for “Carriage and Insurance Paid to”, means the exporter is obligated to load the goods to the first carrier and pay the insurance and freight to the agreed destination in the importer’s country.
It’s noteworthy that the exporter is not responsible for the risks of the goods’ transportation; it just pays the insurance and freight. All the risks transfer to the importer upon the goods’ loading at the exporter’s premises or any other agreed place. CIP is used in all modes of Transport.
What’s the difference between CPT and CIP?
Like CPT, CIP doesn’t hold the exporter responsible for risks from delivery of the goods to the first carrier to the agreed destination point; however, unlike CPT, the exporter must contract for the insurance cover against the importer’s risk. What’s more, unlike Incoterms 2010, Incoterms 2020 requires the exporter to contract for an extensive insurance cover complying with Institute Cargo Clauses (A) or similar clause.
Similarities between CPT and CIP?
Just like CPT, when the parties agree on the CIP Incoterm rule, they have to specify the delivery and destination points clearly. Delivery point is where the risks transfer from the exporter to the importer which is mostly the exporter’s premises. Destination, on the other hand, refers to the point to which the exporter assumes the costs of the carriage.
As for the customs clearance, it’s the exporter that should assume the costs of export clearance. Other customs formalities and duties in the third country and the importer’s country fall on the importer.
In a nutshell,
Under the Incoterms 2020 rules, the exporter assumes the same costs as CPT. Differently from CPT, it also assumes the insurance from the point of delivery to the point of destination.
