Glossary:Cost, insurance and freight (CIF) (2024)

FAQs

What is CIF cost insurance and freight? ›

What is CIF in shipping? Cost, Insurance, and Freight (CIF) is one of the 11 Incoterms® rules set by the International Chamber of Commerce. It's an international shipping agreement, which represents the charges paid by a seller to cover the costs, insurance, and freight of a buyer's order while the cargo is in transit.

To calculate CIF accurately, one must grasp three fundamental components: the cost of the goods, the expenses associated with insuring the goods, and the freight or shipping charges. The CIF value is calculated by the formula CIF = C+I+F.

Cost, insurance, and freight (CIF) is an international shipping agreement used when freight is shipped via sea or waterway. Under CIF, the seller is responsible for covering the costs, insurance, and freight of the buyer's shipment while in transit.

CIF stands for Cost, Insurance, and Freight. These are the fees a seller pays to cover the costs, insurance, and freight of a dealer's order when it's enroute. This sums up the CIF definition. Only commodities carried by water, sea, or ocean are subject to CIF.

Under CIF terms, the seller is responsible for arranging and paying for the transportation of the goods from their location to the destination port. The seller's role includes organizing the necessary shipping documents, preparing the goods for export, and ensuring their delivery to the agreed-upon port of destination.

Under CIF (short for “Cost, Insurance and Freight”), the seller delivers the goods, cleared for export, onboard the vessel at the port of shipment, pays for the transport of the goods to the port of destination, and also obtains and pays for minimum insurance coverage on the goods through their journey to the named ...

How much does cargo insurance cost? Cargo insurance typically costs motor carriers $500-$2,000 a year in premiums for a $100,000 policy limit. However, costs can vary widely based on the type of cargo, the driver's history, and more.

CIF requires the seller to cover the total cost of the goods, freight and insurance. Whereas FOB only requires the seller to cover the cost of loading the goods onto the vessel; the buyer then pays to transport and insure the goods (as well as any other charges incurred once the goods are on board).

CIF does not include any import duties, VAT, or taxes. It does include all export requirements. Under CIF, the seller must export and pay the costs to ship to your destination port, but you must import and pay all costs associated with the importation.

What are the examples of freight insurance? ›

There are different types of freight insurance policies including cargo insurance, marine insurance, shipping insurance, transport insurance, and transit insurance. All these policies cover merchandise and goods against loss or damage during transit from one location to another.

The cost, insurance and freight (CIF) price is the price of a good delivered at the frontier of the importing country, or the price of a service delivered to a resident, before the payment of any import duties or other taxes on imports or trade and transport margins within the country.

Duty is not assessed on Cost Insurance Freight (CIF) charges. U.S. Customs and Border Protection (CBP) value is determined based on the "Price Paid" or "Payable" for the goods, which is usually on the bill of sale or invoice and bill of lading as the Freight On Board (FOB) price.

With CIF, risk is transferred only when the goods are loaded on board the ship at origin. This makes CIF unsuitable for containerized cargo, which is usually dropped off at terminal days prior to loading. This creates a grey area during which cargo could unknowingly suffer damages.

The cost, insurance and freight (CIF) price is the price of a good delivered at the frontier of the importing country, or the price of a service delivered to a resident, before the payment of any import duties or other taxes on imports or trade and transport margins within the country.

The CIF price is the total price for goods delivered onboard the vessel at the port of destination, including insurance and transport, but before import duties and taxes.

Simply put, on the whole it's recommended that buyers use FOB, and sellers use CIF. FOB provides greater control and saves buyers money, but CIF helps sellers maintain a higher profit. The caveat being that new buyers would be better advised to use CIF until they get accustomed to the import process.

The insurance coverage should be at least a minimum of 110% of the value of the goods on the sales contract - this is known as “CIF+10%”. Typically, the insurance will be an original insurance policy covering just that transaction. Additionally, the insurance coverage should be in the same currency as the contract.