CIP (Carriage And Insurance Paid To) means that the seller is responsible for delivery, delivery costs, and insurance costs of the goods until they are transferred to the first carrier tasked with transporting the goods. Once this delivery takes place, the buyer takes on all responsibility.
The two incoterms are very similar, except that CIP is used for all modes of transport, whereas CIF applies to sea freight only. This also means that for CIF, responsibility transfers at the origin seaport, whereas for CIP it transfers at any agreed-upon location in the origin country.
CIP is also very similar to CPT,except that with CIP, the seller is also responsible for arranging main carriage insurance.
OurCPTtips are also helpful for CIP, except for the tip on the buyer arranging insurance – because in CIP, that’s the seller’s job.
The seller is required only to arrange minimum insurance cover, to the invoice value of the goods. If the buyer does not consider that coverage sufficient, an agreed level of cover can be included elsewhere in the contract of sale.
Although the seller is responsible for insurance, the risk transfers to the buyer before the main carriage.
The seller is not obliged to arrange insurance for pre-carriage in the export country or carriage in the import country unless this is specified elsewhere in the sales contract.
Incoterms are updated by the International Chamber of Commerce (ICC) about every 10 years. Interestingly, no particular Incoterms for 2023 or 2024 exist. The Incoterms 2020 applies to shipments that are currently taking place. Expect the next major Incoterms update in 2030.
Carriage and Insurance Paid To (CIP) is an Incoterm where the seller is responsible for the delivery of goods to an agreed destination in the buyer's country, must pay for the cost of this carriage, and must take out maximum insurance cover for the buyer's risk.
Key Takeaways. The term “carriage and insurance paid to (CIP)” signifies that the seller will pay freight and insurance in sending goods to someone chosen by the seller at a mutually agreeable location. The seller must insure the goods being sent for 110% of their contract value.
For the importer, CIP may seem to be one of the best shipping solutions available because it requires the seller to do most of the organising and pay for most of the costs associated with moving and insuring goods. The buyer only pays import duties and for the cost of unloading the goods at their location.
EXW (Ex-works), in which the buyer assumes responsibility at the seller's warehouse and takes care of everything including transportation and insurance. CIP (Carriage and insurance), which puts responsibility for insurance on the seller.
What is the difference between CIP and DAP? The difference between Carriage and Insurance Paid To (CIP) and Delivered At Place (DAP) is that with CIP the seller pays for both the freight and insurance costs from their facility to the destination port, while with DAP they only pay freight charges.
In Carriage and Insurance Paid To (CIP), the seller assumes all risk until the goods are delivered to the first carrier at the place of shipment—not the place of destination. Once the goods are delivered to the first carrier, the buyer is responsible for all risks.
CIP (Carriage And Insurance Paid To) means that the seller is responsible for delivery, delivery costs, and insurance costs of the goods until they are transferred to the first carrier tasked with transporting the goods.
Under FOB, both the cost and the risk transfer at the point of export. Under CIF, the seller's responsibility for the goods ends at the port of destination, but their risk for the goods ends when they are loaded on the vessel at the port of export.
Under CIP incoterm, the buyer has to ensure that he receives all the necessary documents from the seller required for import proceedings. As the buyer takes over authority right after the destination port, he'll be the one paying for charges such as import taxes and duties.
So, what is the main difference between CIF and CIP? The main difference between CIF and CIP is where the insurance and logistical responsibility for freight shifts. For CIF, it is the moment the freight reaches the dock of import. For CIP, it transitions more gradually to when delivery at buyer destination occurs.
The Incoterm CIP stands for Carriage and Insurance Paid and means that the seller is responsible for arranging the delivery of goods to the carrier and pay the fee for carriage to the named destination. Used in sea, land and air freight, this term can be used for any mode of transport.
With the CIP Incoterm, the seller arranges the transportation, costs and insurance on behalf of the buyer to a named place at destination. Under the Incoterms 2020 CIP terms, the risk is transfered to the buyer once delivered to the first carrier.
What Is the Most Popular Incoterm? While it varies, we often see EXW (Ex Works) used in international contracts. It's one of the easiest for sellers, who only have to make the buyer's shipment available for pickup.
There are no updates for Incoterms in 2024. The latest version remains to be Incoterms 2020. These terms are roughly updated every 10 years. Hence, we should be expecting the next update in the year 2030.
Incoterms 2024 introduces the Delivered at Place Unloaded (DPU) Incoterm, replacing the Delivered at Terminal (DAT) Incoterm from Incoterms 2010. DPU allows for delivery at a specific place, providing more flexibility compared to the previous version.
Currently, there are 11 Incoterms, each delineating distinct responsibilities and obligations between the buyer and seller. These terms fall into two main categories: those applicable to any mode of transportation (such as EXW, FCA, CPT) and those designed for sea and inland waterway transport (like FOB, CIF, DAT).
Introduction: My name is Nicola Considine CPA, I am a determined, witty, powerful, brainy, open, smiling, proud person who loves writing and wants to share my knowledge and understanding with you.
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