What is CIF?
Cost, Insurance and Freight (CIF) is an Incoterm where the seller pays for ocean freight and minimum cargo insurance to a named destination port. Risk transfers to the buyer when goods are loaded on board the vessel at the port of shipment. CIF applies to sea and inland waterway transport only. It is commonly used in bulk commodity trade and raw material shipments where the buyer accepts minimum insurance cover arranged by the seller.
If you have received a supplier quote showing “CIF Felixstowe” or “CIF Southampton” and you are not sure what it means, this article explains it in plain English.
CIF puts a major amount of logistics responsibility on the seller. The seller pays for the main sea freight and arranges cargo insurance. But there is a critical trap that catches many new shipping coordinators: the seller pays the freight and insurance bill, yet the risk of loss or damage transfers to you, the buyer, when the goods are loaded on board the ship at the origin port. The goods may still be far from the UK when you become responsible for them.
Understanding exactly when that risk transfer happens, and what the minimum insurance actually covers, is the most important thing this article will teach you.
Here is the full sequence of events under a CIF shipment, from factory to UK port.
1. Contract agreed. The seller and buyer agree on CIF terms and name a specific destination port: for example, “CIF Felixstowe” or “CIF Southampton.” The named port is important. It determines how far the seller is responsible for costs.
2. Seller prepares and packs goods. The seller packs the goods and prepares them for export. All packing costs, origin handling, and haulage to the port are the seller’s responsibility.
3. Seller handles export customs clearance. The seller clears the goods through export customs in the country of origin. The seller pays any export duties and needs an EORI (Economic Operators Registration and Identification) number in the exporting country to do this.
4. Goods are loaded on board the vessel. This is the critical moment under CIF. When the goods are placed on board the vessel at the port of shipment, risk transfers from the seller to the buyer. From this point, any loss or damage is the buyer’s commercial problem.
5. Seller arranges and pays for main sea freight. The seller contracts and pays for ocean freight from the origin port to the named destination port. The seller also arranges and pays for cargo insurance, but only at the minimum level (Institute Cargo Clauses C, explained below).
6. Transit. The goods travel by sea. The seller has paid for the freight and the insurance policy is in force. But the buyer now bears the risk. If goods are damaged during the voyage, the buyer must make the insurance claim.
7. Goods arrive at the destination port. When the vessel docks, at Felixstowe, Southampton, or another UK port, import customs clearance is entirely the buyer’s responsibility. The buyer must have a UK EORI number, appoint a customs broker, and file a customs declaration through the UK Customs Declaration Service (CDS). The buyer pays UK import duty and UK import VAT.
8. Seller’s obligation ends at the port. The seller’s cost obligation ends when the goods arrive at the named port. Unloading, port handling, and onward delivery to the buyer’s premises are all the buyer’s costs: unless the freight contract specifically includes them.
| Responsibility | Seller | Buyer |
|---|---|---|
| Packing and origin handling | Yes | No |
| Export customs clearance | Yes | No |
| Export duties and taxes | Yes | No |
| Origin haulage to port | Yes | No |
| Main sea freight to named destination port | Yes | No |
| Cargo insurance (Clauses C minimum) | Mandatory | Not required |
| Risk of loss or damage in transit | Ends when goods on board at origin port | From when goods on board at origin port |
| Import customs clearance | No | Yes |
| Import duties and import VAT | No | Yes |
| Port unloading at destination | No | Yes |
| Last-mile delivery from destination port | No | Yes |
The single most important point about CIF: the seller pays the freight and the insurance, but the buyer carries the risk from the moment goods are loaded on the vessel. If anything goes wrong after that point, the buyer has a claim on the seller’s insurance, but the buyer is the one who has to make it, and the cover may be limited.
When a supplier quotes you a price on CIF terms, here is what that price covers.
What the seller’s CIF price includes:
What the buyer must arrange and pay for separately:
A cost example in practice:
A UK importer buys 500 units of industrial valves from a manufacturer in Guangzhou, China. The goods are worth £40,000. The supplier quotes CIF Southampton. The CIF price covers everything from the factory to Southampton docks. On top of that, the UK importer arranges and pays for: unloading at Southampton, customs clearance (typically £200–£350 via a broker), UK import duty (2.7% on valves = £1,080), and UK import VAT (20% on the full customs value including freight and insurance and duty, around £8,200). None of these are inside the CIF price.
Under CIF, risk passes from seller to buyer when the goods are loaded on board the vessel at the port of shipment in the country of export.
This is an important distinction. The goods are physically on the ship. They have not yet left port. They have not crossed any ocean. But from this moment, the buyer bears the risk of loss or damage.
What does “risk” mean in plain terms? If the goods are damaged or lost after this point, it is the buyer’s financial loss. The seller does not have to send replacement goods or refund the buy price because something went wrong during transit.
Here is a concrete example. A UK wholesaler imports 10 tonnes of dried lentils from a supplier in Turkey on CIF Felixstowe terms. The lentils are loaded on board the vessel at Mersin port in Turkey. During the voyage, a water pipe in the hold bursts and a portion of the cargo is contaminated. Risk has already transferred to the UK wholesaler. The wholesaler must claim on the insurance policy that the Turkish supplier arranged, and because CIF only requires Clauses C cover, the claim outcome depends on whether water ingress from a burst pipe is a covered peril under that policy.
This is exactly why the insurance minimum matters so much under CIF. The buyer owns the risk. The seller arranges minimum cover. Whether that cover actually pays out depends on the cause of the loss.
Under CIF, the seller must arrange cargo insurance. This is a contractual obligation built into the Incoterm, not optional.
However, the minimum level of insurance required under CIF is Institute Cargo Clauses C: the most basic and least comprehensive standard cargo insurance available.
The difference between Clauses A, B, and C in plain English:
CIF only requires Clauses C. If your goods are damaged by something not on the Clauses C named perils list, and many common transit incidents are not on that list, your insurance claim may be denied.
What cover amount does the seller provide? The Incoterms rules say the seller must insure for the contract value plus 10%, so 110% of the invoice value. This covers the goods plus a margin for incidental costs.
What should buyers do?
If you are buying on CIF terms, the safest approach is to ask your supplier for a copy of the insurance certificate before the goods ship, and then arrange a top-up policy, or replace the seller’s Clauses C policy with your own Clauses A cover. You own the risk from the moment goods are loaded; you should own the insurance too. HMRC’s guidance on how Incoterms interact with UK customs valuation is at gov.uk/guidance/customs-valuation/incoterms.
Control over freight logistics. The seller arranges and pays for ocean freight. This means the seller uses their preferred shipping lines, negotiates their own rates, and controls the sailing schedule. High-volume sellers can pass on economies of scale within their CIF price.
A complete, competitive quote. A CIF price covers everything up to the destination port. For buyers who want a simple cost to a named port, CIF is easy to compare across suppliers. This can be a commercial advantage when bidding against suppliers quoting EXW (Ex Works) or FOB (Free On Board) terms where the buyer arranges freight separately.
Insurance is included. The seller arranges Clauses C cover as part of the deal. There is no gap in cover during the sea voyage, and the seller can include the insurance cost within the overall price, often at competitive rates if they ship regularly.
Widely understood. CIF is one of the most widely recognised Incoterms in international commodity and raw material trade. It is familiar to banks, freight forwarders, and traders in most major export markets.
Clear customs responsibilities. The seller handles export customs; the buyer handles import customs. There is no ambiguity about who arranges what on either side of the border.
Freight is arranged by the seller. You do not have to contract an ocean carrier or negotiate freight rates. The seller handles this. If there are delays at origin or routing complications, the seller’s freight forwarder deals with them.
Insurance is included. Some minimum level of cover is in place from the moment goods are loaded at origin. You do not have to arrange an insurance policy from scratch, though you should consider whether Clauses C is adequate and top up if needed.
Simpler pricing to a port. You receive a single CIF price to your named destination port. Your additional costs: port unloading, import duty, customs clearance, and onward delivery, are predictable and can be budgeted separately.
Useful for letter of credit transactions. CIF is explicitly referenced in many letter of credit (LC) frameworks, particularly for bulk commodity trades. Banks and trade finance providers are familiar with CIF bills of lading and CIF certificates of insurance. In some LC-based transactions, CIF is the expected Incoterm.
Appropriate for bulk commodity buying. In bulk trades, grain, ore, coal, raw materials. CIF is the market standard. Pricing in these markets is often quoted CIF, and both buyer and seller understand the terms.
The seller pays freight but does not control the goods after loading. Once goods are on board, risk has transferred, but the seller is still paying the freight bill. If the buyer disputes delivery or damage, the seller has limited commercial use once the vessel has sailed.
Freight and insurance costs sit with the seller until payment. The seller pays for export clearance, ocean freight, and insurance upfront. In cash-flow terms, this is a major outlay before the buyer pays. For large shipments or slow-paying buyers, this can create working capital pressure.
The named port must be agreed carefully. CIF ends at the named destination port, not the buyer’s warehouse. If the buyer expects delivery to their premises and the contract only says “CIF Felixstowe,” there will be a dispute about who pays the last mile. Sellers should be explicit about what the CIF price covers.
Minimum insurance may not cover losses the buyer expected. If the buyer suffers a loss that Clauses C does not cover, they may blame the seller, even if the seller met their contractual obligation. This can damage commercial relationships even when the seller has done nothing wrong.
Not appropriate for containerised FCL shipments. The CIF risk point, “on board the vessel”, is technically problematic for full container loads. In containerised shipping, the shipper hands goods to the terminal long before they are lifted onto the ship. CIP (Carriage and Insurance Paid To) is the ICC’s recommended alternative for containers.
Minimum insurance is genuinely minimum. This is the biggest trap in CIF. Clauses C cover, what CIF requires, does not cover water ingress, theft, or many of the most common types of cargo damage. If your goods are damaged in ways not covered by Clauses C, your claim will be denied. You own the risk; you need to understand the cover.
The buyer makes the insurance claim, not the seller. Risk transfers to the buyer when goods are loaded at origin. If goods are damaged in transit, the buyer must make the claim on the seller’s insurance policy. This means dealing with a foreign insurer, potentially in a different language, while also managing the arrival of damaged goods at a UK port.
Import duties, VAT, and customs clearance are entirely the buyer’s responsibility. You need a UK EORI number, a customs broker, and a customs declaration filed through CDS. Goods above £135 in customs value attract UK import VAT at 20%, this is a major cost that must be factored in. If your paperwork is not ready when the vessel arrives at Felixstowe or Southampton, your goods will incur port storage charges while you sort it out.
CIF ends at the port. If your named place is Felixstowe and your warehouse is in the Midlands, you are responsible for the road transport from the port. Arrange your haulier before the vessel arrives, not after.
No visibility of freight or routing until goods are shipped. The seller arranges the freight. As the buyer, you may not know which vessel your goods are on, the routing, or the estimated arrival date until the seller sends shipping documents. This can complicate your warehouse planning and stock management.
CIF works well in the following situations.
Bulk commodity trade. CIF is the market standard for bulk raw materials, grain, coal, ore, fertiliser, and similar commodities. In these markets, CIF pricing is conventional and both parties understand the terms. If your market quotes CIF, use it.
Letter of credit transactions where CIF is specified. Some older or commodity-specific letter of credit frameworks explicitly require CIF terms. If your bank requires a CIF bill of lading, use CIF.
When you trust your supplier’s freight rates. If your supplier has strong freight contracts with shipping lines and their CIF price is competitive with your own freight quotes, there is no reason to take on the logistics yourself.
When you are buying small volumes on sea freight. For LCL (less than container load) shipments, CIF can work, risk passes on board, which is a clear point for a break-bulk or groupage shipment.
When you will arrange supplemental insurance yourself. Some buyers are comfortable with CIF precisely because they take out their own comprehensive Clauses A policy on top of the seller’s Clauses C. This gives them full control over the insurance and the claims process.
Avoid CIF for containerised FCL shipments. CIF’s “on board” risk point is technically misaligned with how containers are handled. The ICC recommends CIP (Carriage and Insurance Paid To) for containers. Using CIF for an FCL container shipment is not invalid, but it is the wrong tool for the job.
Avoid CIF if you want comprehensive insurance arranged by the seller. CIF only requires Clauses C. If you want the seller to arrange Clauses A (“all risks”) cover as a standard obligation, use CIP instead. Clauses A is the mandatory minimum under CIP since Incoterms 2020.
Avoid CIF for multimodal shipments. CIF is sea and inland waterway only. If your goods travel by road, rail, or air at any stage, CIF does not apply. Use CIP or CPT (Carriage Paid To) for multimodal movements.
Avoid CIF if you want control over your own freight forwarder. Under CIF, the seller arranges the ocean carrier. If you have a preferred freight forwarder with competitive rates and a track record you trust, use CFR (Cost and Freight) or FOB (Free On Board) instead, these let you control who handles the main freight.
Avoid CIF for high-value or fragile goods. The gap between Clauses C and Clauses A cover is major for goods where damage is likely or where the financial consequence of a denied claim is large. For electronics, machinery, luxury goods, or fragile items, CIP or your own comprehensive insurance is the right approach.
If CIF is not right for your situation, consider CIP (Carriage and Insurance Paid To) for all-mode shipments with comprehensive insurance, or CFR (Cost and Freight) if you want the seller to pay sea freight but you will arrange your own insurance.
Mistake 1: Assuming Clauses C covers what Clauses A covers.
It does not. Clauses C is a named-perils policy covering a short list of basic risks. Water ingress, theft, and most handling damage are not covered. If your goods arrive damaged, the cause of damage determines whether your claim succeeds. Know what Clauses C does and does not cover before you rely on it.
Mistake 2: Confusing “seller arranged insurance” with “seller bears the risk.”
The seller pays for the insurance, but the buyer carries the risk from loading at origin. If goods are damaged in transit, it is the buyer’s financial loss and the buyer’s insurance claim to make. Many new shipping coordinators assume the seller will resolve transit damage, they will not, and legally, they do not have to.
Mistake 3: Not getting a copy of the insurance certificate before goods ship.
The seller must provide a certificate of insurance so the buyer can make a claim if needed. Request this before the vessel sails. Check: is the cover at least 110% of the invoice value? What clauses apply? Is the insured party transferable to you?
Mistake 4: Forgetting that CIF ends at the destination port, not your warehouse.
The seller’s obligation ends when the goods arrive at the named port. Unloading, port handling, and haulage to your premises are your costs. If you agree “CIF Felixstowe” and your warehouse is in Birmingham, you pay the Birmingham leg.
Mistake 5: Failing to prepare UK import documentation before the vessel arrives.
As the buyer under CIF, you handle UK import customs clearance. You need a UK EORI number, a customs broker, and a CDS declaration filed before or immediately upon arrival. Goods that cannot be cleared promptly will incur storage charges at Felixstowe, Southampton, or whichever port of entry you use. HMRC’s guidance on Incoterms and customs valuation is at gov.uk/guidance/customs-valuation/incoterms.
Mistake 6: Using CIF for air freight or road shipments.
CIF applies to sea and inland waterway transport only. Using CIF in a contract for an air freight or road shipment is technically incorrect and can cause confusion about which rules apply. Use CIP for all-mode shipments.
Mistake 7: Applying CIF to containerised FCL without understanding the risk point.
Under CIF, risk passes “on board the vessel.” For a full container load, the container is handed to the terminal operator long before it is lifted onto the ship. This gap in the risk transfer timeline can cause disputes. CIP, which transfers risk at first carrier handover, is cleaner for container shipments.
CIF (Cost, Insurance and Freight) and CIP (Carriage and Insurance Paid To) are the two Incoterms where the seller is required to arrange and pay for both freight and insurance. The differences between them are major and have real consequences for buyers.
| Key Difference | CIF | CIP |
|---|---|---|
| Transport modes | Sea and inland waterway only | All modes — sea, air, road, rail |
| Minimum insurance level | Institute Cargo Clauses C (basic named perils) | Institute Cargo Clauses A (all risks) |
| Risk transfer point | When goods are on board the vessel at port of shipment | When goods are handed to the first carrier at origin |
| Suitable for containers | Technically incorrect — risk point misaligned with containerised logistics | Yes — risk point aligns correctly |
| Named place | Named port of destination | Any named destination (not necessarily a port) |
| ICC recommendation for containers | No | Yes |
The most important practical difference is insurance. CIF requires only Clauses C, the bare minimum, covering a short list of basic perils. CIP requires Clauses A, comprehensive, all-risks cover. For most cargo, this is a meaningful difference that affects whether an insurance claim succeeds.
The second key difference is transport mode. CIF is strictly sea and inland waterway. If your goods are moving by air or road at any point, CIF cannot be used. CIP applies to all modes.
Choose CIF if you are buying purely sea freight bulk commodities in a market where CIF is the standard, or where a letter of credit specifically requires it.
Choose CIP if you want comprehensive Clauses A insurance arranged by the seller, if your goods are in containers, or if you are shipping by any mode other than pure sea freight.
CFR (Cost and Freight) is the sea-only Incoterm most closely related to CIF. The only difference between them is insurance.
| Key Difference | CIF | CFR |
|---|---|---|
| Transport modes | Sea and inland waterway only | Sea and inland waterway only |
| Risk transfer point | When goods on board the vessel at port of shipment | When goods on board the vessel at port of shipment |
| Seller arranges and pays for sea freight | Yes | Yes |
| Seller arranges cargo insurance | Yes — Clauses C minimum | No — no obligation |
| Buyer must arrange own insurance | Not required (but top-up advisable) | Yes — buyer must arrange |
| Named place | Named port of destination | Named port of destination |
Under CFR, the seller pays the freight to the destination port, exactly like CIF, but the seller has no insurance obligation. The risk transfer point is identical: goods on board the vessel at origin. The buyer bears the transit risk and must arrange their own insurance policy.
Choose CIF if you want some insurance cover arranged by the seller as part of the deal, even if that cover is only Clauses C. For buyers new to international trade who have no existing marine cargo policy, CIF at least ensures some cover is in place.
Choose CFR if you have your own marine cargo insurance policy that covers all your imports, or if you want to use your preferred insurer with your own terms and excess levels. CFR gives you full control over the insurance without changing anything else about the freight arrangement.
CIF applies only to sea freight and inland waterway transport. This is a hard limitation, not a preference.
If your goods travel by road, rail, or air at any stage of the main journey, or if you are using containerised sea freight. CIF is technically the wrong Incoterm.
Sea freight (bulk and break-bulk). CIF is most appropriate here. For bulk commodity shipments, grain, coal, ore, agricultural products. CIF is the market standard. Risk passes on board the vessel, which makes sense for break-bulk or loose cargo loaded directly into the hold.
Containerised sea freight (FCL and LCL). CIF is technically problematic for containers. Risk passes “on board the vessel”, but for a container, the shipper hands the goods to the terminal operator before the ship arrives. The container may sit in the terminal for days before being lifted on board. This creates a gap in the risk timeline. The ICC recommends CIP for containerised shipments because its risk transfer point (first carrier handover) is clear and unambiguous.
Air freight. CIF cannot be used. If your goods are flying, you need a different Incoterm. CIP is the correct all-mode alternative.
Road freight. CIF cannot be used. For road freight, including post-Brexit UK-EU trade, use CIP or CPT.
Rail freight. CIF cannot be used. Rail shipments from China via the Trans-Siberian route, for example, should use CIP.
The practical rule: if your goods are going on a ship and you are not using a container, CIF may be appropriate. For anything else, use CIP.
Under Incoterms 2020, CIF did not change. The rules for CIF are the same as they were under Incoterms 2010.
This is an important contrast with CIP, which did change majorly in 2020. CIP’s minimum insurance level was upgraded from Clauses C to Clauses A. CIF’s minimum remained at Clauses C.
Why did CIF not change?
The ICC upgraded CIP to Clauses A because CIP is typically used for high-value containerised and multimodal shipments where comprehensive insurance is appropriate. CIF, by contrast, is used primarily for bulk commodity trade, markets where Clauses C has historically been the accepted standard and where buyers and sellers negotiate insurance levels separately. The ICC left CIF at Clauses C to avoid disrupting established commodity market practice.
What this means for you:
If you are comparing CIF and CIP contracts, remember that a CIP 2020 contract gives you Clauses A insurance as a minimum, while a CIF 2020 contract gives you only Clauses C. The version of Incoterms referenced in your contract matters, always check whether a contract says “Incoterms 2010” or “Incoterms 2020,” and always specify the version in any contract you sign.
Can you agree different insurance levels under CIF?
Yes. The parties can agree in writing to a higher level of insurance than Clauses C. If you are buying on CIF terms but want Clauses A cover, negotiate this with your supplier and record it in the contract. The Incoterms rules set a floor; you can always agree more cover above it.
CIF has specific implications for UK trade that every shipping coordinator should understand.
You are the importer of record. Under CIF, the UK buyer handles and pays for all UK import customs clearance. You need a UK EORI number, without one, you cannot import goods commercially into the UK. If you do not have a UK EORI number, register through HMRC. It typically takes 3–5 working days.
Import customs declarations go through CDS. The UK’s Customs Declaration Service (CDS) replaced the old CHIEF system in November 2023. All import declarations must now be filed through CDS. Your customs broker should be using CDS, if they mention CHIEF, check with them.
UK import duty applies. Once your goods arrive, you will pay UK import duty at the commodity code rate. You can check rates using the UK Global Tariff. The customs value for import duty purposes is typically the CIF price, the cost of the goods plus freight and insurance. HMRC’s guidance on customs valuation and how Incoterms affect it is at gov.uk/guidance/customs-valuation/incoterms.
UK import VAT applies. Goods imported into the UK with a customs value above £135 are subject to UK import VAT at 20%. This is payable at the border unless you use postponed VAT accounting, which lets you defer the payment and account for it on your VAT return. For most VAT-registered UK businesses importing commercial quantities, postponed VAT accounting is the standard approach.
The £135 de minimis threshold. For consignments valued at £135 or below (customs value, not including shipping costs), UK import VAT is collected at the point of sale rather than at the border. Most commercial CIF shipments will exceed this threshold, but it is relevant if you are importing samples or low-value test shipments.
Port arrival. For sea freight, Felixstowe handles the majority of UK container imports. Southampton is a major alternative for some trade lanes. Have your customs broker briefed and your CDS paperwork ready before the vessel arrives. Delays in customs clearance result in port storage charges, which are your cost, not the seller’s.
You handle UK export customs clearance. As the seller under CIF, you are responsible for UK export clearance. You need a UK EORI number and must file an export declaration through HMRC’s systems, typically through your freight forwarder or customs agent.
Post-Brexit considerations. Since the UK left the EU customs union at the end of 2020, goods moving between the UK and EU member states require full customs formalities in both directions. As a UK exporter selling CIF to an EU buyer, you handle UK export clearance and the EU buyer handles EU import clearance. Make sure both parties understand their respective customs responsibilities, particularly if the buyer is new to post-Brexit trade.
Arranging insurance. As the seller under CIF, you must arrange cargo insurance at Clauses C minimum. If you ship regularly, an open cover policy, which automatically covers each shipment under agreed terms, is more efficient and often cheaper than individual per-shipment policies.
Here is a realistic worked example to make CIF concrete.
The scenario: A UK manufacturer. Hartley Industrial in Sheffield, orders 20 tonnes of steel tubing from a supplier in Tianjin, China. The contract is agreed on CIF Felixstowe, Incoterms 2020.
Goods value: £32,000
Freight cost (included in CIF price): £2,800
Insurance cost (included in CIF price): £95 (Clauses C, covering £35,200, 110% of goods value)
What happens:
The Chinese supplier packs and prepares the steel tubing, handles export clearance through Chinese customs, and arranges a freight forwarder to transport the goods to Tianjin port.
The tubing is loaded on board the vessel at Tianjin port. At this point, goods on board the ship at origin, risk transfers to Hartley Industrial in Sheffield. The goods are still in China. They have not crossed any ocean. But Hartley Industrial now bears the risk.
The vessel travels from Tianjin to Felixstowe. During the voyage, the container experiences some condensation. On arrival at Felixstowe, light surface corrosion is found on about 10% of the tubing.
Hartley Industrial’s customs broker files the UK import declaration through CDS. Hartley Industrial pays UK import duty (the duty rate on steel tubing under UK Global Tariff at 0% under certain product codes, but UK import VAT at 20% on the CIF value of £34,800 = £6,960, handled via postponed VAT accounting).
The goods are unloaded at Felixstowe. Hartley Industrial’s haulier collects them and delivers to Sheffield.
Hartley Industrial discovers the surface corrosion and contacts the supplier for the insurance certificate to make a claim. However, the supplier’s insurance is at Clauses C level. Condensation damage, a non-listed peril, is not covered under Clauses C. The claim is denied.
The key lesson: The corrosion damage was real and the insurance policy was in force, but Clauses C did not cover this type of damage. Had Hartley Industrial arranged supplemental Clauses A cover on top of the CIF contract, or negotiated CIP terms with Clauses A as the baseline, the claim would have succeeded. The cost of the additional cover would have been modest compared to the loss.
CIF stands for Cost, Insurance and Freight. It is one of the 11 Incoterms 2020 rules published by the International Chamber of Commerce (ICC). Under CIF, the seller pays for sea freight and minimum cargo insurance (Clauses C) to a named destination port, but risk transfers to the buyer when goods are loaded on board the vessel at the port of shipment.
Both require the seller to arrange and pay for freight and insurance. The key differences are: CIF is restricted to sea and inland waterway transport; CIP applies to all modes. CIF requires only minimum insurance (Clauses C, named perils); CIP requires Clauses A (all risks, much more comprehensive). CIF’s risk point is “on board the vessel”, technically wrong for containerised FCL cargo; CIP’s risk point is the first carrier handover, which is correct for containers. For modern containerised shipping, CIP is the better choice.
Under CIF (Incoterms 2020), the seller must provide insurance at Institute Cargo Clauses C level as a minimum. Clauses C covers only named perils, fire, explosion, stranding, sinking, collision, and general average. It does not cover water ingress, theft, or many common transit incidents. The insured amount must be at least 110% of the contract value. Buyers should consider topping up to Clauses A with their own policy.
The “trap” in CIF is the gap between who bears the risk and what the insurance covers. Risk transfers to the buyer when goods are loaded at origin, long before the goods arrive in the UK. But the insurance the seller provides is Clauses C, which is the most limited standard cover. If goods are damaged in a way not listed in Clauses C, the buyer’s claim fails. The buyer owns the risk; the insurance may not match the risk.
No. UK import duty and UK import VAT are always the buyer’s responsibility under CIF. The CIF price covers the goods, origin handling, export clearance, ocean freight to the named destination port, and Clauses C insurance. You then add: unloading at the UK port, customs clearance costs, UK import duty, UK import VAT, and last-mile delivery. As the importer of record, you also need a UK EORI number and must file a customs declaration through CDS.
No. CIF applies to sea and inland waterway transport only. If your goods are flying, you need a different Incoterm. CIP (Carriage and Insurance Paid To) is the correct alternative, it applies to all transport modes and requires Clauses A comprehensive insurance.
CIF is still used for containerised shipments in practice, but the ICC does not recommend it. The CIF risk transfer point, “on board the vessel”, is technically misaligned with how containers are handled. The container is handed to the terminal before the ship arrives, and the shipper has no further control after that point. CIP, with its “first carrier handover” risk point, is cleaner and more appropriate for containerised cargo.
Nothing changed for CIF in Incoterms 2020. The rules are identical to Incoterms 2010. The minimum insurance level remains at Clauses C. This contrasts with CIP, which was upgraded from Clauses C to Clauses A in the 2020 revision. If you are comparing CIF and CIP quotes, remember that CIP 2020 now includes majorly better insurance.
Article: cif-incoterm | ShippingEducation.co.uk | Published June 2026 | Incoterms 2020
Internal links: CIP CIP IncotermFR Incoterm | HMRC Customs Valuation. Incoterms
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