How to define CIP under Inco Terms 2020

CIP (Carriage and Insurance Paid to) (named Location)

Under Inco Terms 2020, CIP stands for Carriage and Insurance Paid to a named place.  The detailed named place with year of Inco Terms rules may preferably mentioned in the sale agreement of goods between buyer and seller, so as to enable the buyer and seller for smooth handling of movement of goods in terms of risks of costs and damages.  It is recommended to use latest revision of Inco Terms 2020 by all exporters and importers, as International Chamber of Commerce modifies the definitions of each terms for smooth handling of trade on costs, risks and damage of goods while movement of goods from seller’s premises to buyer’s premises.

CIP terms of delivery can be used for all modes of transport – by Air, Sea or Land.

Under CIP terms, the seller (Exporter in International trade) delivers goods to a carrier or another person nominated by the seller, at an agreed place, for transportation to the named destination on the buyer’s side, appropriately packaged, covered insurance.

Seller pays cost of carriage to bring the goods to the named destination (the final named location, not the final destination port). 

Under Inco terms CIP (Carriage and Insurance Paid to), seller bears all risks incurred until the goods are delivered to the first carrier on the sellers Country.

Customs clearance process with export documentation has to be effected by Exporter (seller) under CIP terms of delivery of goods.  However, import clearance process and import documentation is the responsibility of Importer (buyer).

Since the term CIP includes the letter ‘I’ under Inco Terms, it is the responsibility of Seller to cover insurance.  As per Incoterms 2020, the seller is obliged to provide cargo insurance as mandated by institute clause ‘A’ or All risk Coverage under CIP terms of delivery of goods.  Since the cost of main carriage is paid by Seller, the control over main carriage is with Exporter (seller). Under CPT terms, the Seller decides Carrier of the goods for on carriage and he is the in charge of carrier selection, thereby control over freight cost of on carriage. 

The cost of export customs clearance and export documentation is absorbed by the exporter (seller) under CPT terms of delivery of goods.  The responsibility of proper packaging of goods to reach final destination is with the Seller in all Inco Terms of delivery of goods.

Importantly note, like CPT terms, under CIP terms also, the responsibility of seller is to arrange and pay the freight only to the named place mentioned with a minimum coverage of Insurance.  The risk of damage or loss of goods transfers from Seller to buyer as soon as the seller delivers goods to the carrier.  If multiple carriers are involved, the seller’s responsibility on damage and loss of goods ends at the time of delivering goods to the first carrier.  In other words, under CIP terms, the risk does not pass equally with the cost from Seller to Buyer. 

Usually, CIP and CPT terms are used for the movement of goods to warehouse and inland dry ports. CIP and CPT terms of delivery are used for movement of goods on LCL (Less Cargo Load) basis and break bulk movement.

So, under CIP terms of delivery of goods, cost of packaging, pre carriage, export documentation, export customs clearance and main carriage are taken care by exporter.  Exporter also takes care of Export General Manifest filing at exporting country.

CIP and CPT terms of delivery are suitable for movement of goods from one warehouse to another.Click here to read about Ex-works, FOB,FCA,CPT,CIP,DAP,DPU,DDP,FAS,CFR and CIF  under INCO TERMMS 2020

 CIP – Carriage and Insurance Paid
            (named Place)

 The above details are about CIP delivery rules under Inco terms 2020 movement of goods.  Share below your thoughts about CIP, Carriage and Insurance Paid to a named location.

Click here to read other delivery rules under Inco terms  

Learn practical problems and solutions in Exports and Imports

Banking rules related to Exports and Imports in India

How to open Letter of Credit, easily explained here

04 Categories of Inco Terms 2020     D Category of Delivery terms under Incoterms 2020     C Rules of Delivery terms under Incoterms 2020     F Rules of Inco Terms 2020E Category of Incoterms 2020     Omni Model Inco Terms of Delivery 2020     FOB and CFR under Inco terms 2020    CIF and FOB under Inco terms 2020     Do Inco Terms rules talk about payment of goods?     Does Incoterms explains about ownership of goods?      Inco Terms used under Sea and Inland waterways only     Difference between Omni model Inco Terms and Marine Restricted     When does Bank use IncoTerms ?     Compare CIF and DPU from Inco terms 2020 point of view     CIF and DAP under Inco terms 2020     Difference between FAS and FOB under Inco terms 2020     CFR and FAS, A Comparison under Inco terms 2020     FAS and CIF under Inco terms 2020          CIF terms, Importer or Exporter responsible to unload the goods?