What is CIP?
Carriage and Insurance Paid To (CIP) is an Incoterm where the seller pays for freight and comprehensive insurance to a named destination, but risk transfers to the buyer when goods are handed to the first carrier. CIP applies to all transport modes, road, sea, air, and rail. It is commonly used for containerised shipments and air freight where the buyer wants insurance cover arranged by the seller.
If you have just received a quote from a supplier showing “CIP [city name]” and you are not sure what it means for you, this article explains it in plain English.
CIP places a major amount of responsibility on the seller. The seller arranges the main freight and pays for comprehensive insurance. But there is a catch that trips up a lot of new shipping coordinators: even though the seller is paying the freight and insurance bill, the risk of loss or damage transfers to you, the buyer, much earlier in the journey. Understanding exactly when that happens is the most important thing this article will teach you.
Here is the full sequence of events under a CIP shipment, from start to finish.
1. Contract agreed. The seller and buyer agree on CIP terms and name a specific destination: for example, “CIP Birmingham Distribution Centre.” That named place matters. 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. The seller pays for all costs at origin, including origin handling and haulage to the export point.
3. Seller handles export customs clearance. The seller is responsible for clearing the goods through customs in the country of export. The seller pays export duties and any export taxes. The seller also needs an EORI (Economic Operators Registration and Identification) number in the country of export to do this.
4. Goods are handed to the first carrier. This is the critical moment. When the seller hands the goods to the carrier they have arranged, whether that is a shipping line, an airline, or a road haulier, risk transfers to the buyer. From this point, any loss or damage is the buyer’s problem commercially, even though the seller arranged the transport.
5. Seller arranges and pays for main freight. The seller contracts the carrier and pays the freight cost all the way to the named destination. The seller also arranges and pays for comprehensive cargo insurance (Institute Cargo Clauses A, see the insurance section below).
6. Transit. The goods travel. The seller has paid for the journey, and the insurance policy is in force. But the buyer bears the risk, so if the goods are damaged, the buyer makes the insurance claim.
7. Goods arrive at the destination country. Import customs clearance is 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 import duties and UK import VAT.
8. Delivery to named place. The seller’s freight contract covers delivery to the named destination. The buyer takes the goods and the shipment is complete.
| Responsibility | Seller | Buyer |
|---|---|---|
| Packing and origin handling | Yes | No |
| Export customs clearance | Yes | No |
| Export duties and taxes | Yes | No |
| Origin haulage to carrier | Yes | No |
| Main freight to named destination | Yes | No |
| Cargo insurance (Clauses A minimum) | Mandatory | Not required |
| Risk of loss or damage in transit | Ends at first carrier handover | From first carrier handover |
| Import customs clearance | No | Yes |
| Import duties and import VAT | No | Yes |
| Last-mile delivery (if beyond named place) | No | Yes |
| Unloading at destination | No | Yes |
The single most important thing to remember about CIP: the seller pays the freight and the insurance, but the buyer carries the risk from the moment goods leave the seller’s hands. If anything goes wrong in transit, the buyer has a valid insurance claim, but the buyer is the one who has to make it.
When a supplier quotes you a price on CIP terms, here is what that price covers.
What the seller’s CIP price includes:
What the buyer must arrange and pay for separately:
A cost example in practice:
A UK retailer imports clothing from a manufacturer in Bangladesh on CIP Southampton terms. The goods are worth £25,000. The CIP price covers everything from the factory gate to Southampton. On top of that, the UK retailer arranges and pays for: customs clearance (typically £150–£300 via a broker), UK import duty (12% on clothing = £3,000), and import VAT (20% on the full value including duty = around £5,600). These are not included in the CIP price, they are the buyer’s separate costs.
Under CIP, risk passes from seller to buyer when the seller hands the goods to the first carrier at the point of origin.
“The first carrier” means the carrier the seller has contracted to begin the main transit: for example, when goods are loaded onto a lorry at the seller’s factory, when they are checked in at an air freight depot, or when they are delivered to a container freight station (CFS) for stuffing.
This is earlier than many buyers expect. The goods may still be in the country of origin. They may not yet be at the port. They have not yet left for the UK. But risk has already transferred.
What does “risk” mean in plain terms? If the goods are damaged or destroyed after this point, it is the buyer’s financial loss. The seller does not have to send replacement goods or refund the price just because something went wrong in transit.
Here is a concrete example. A UK fashion brand imports 2,000 dresses from a Vietnamese manufacturer on CIP London terms. The dresses are handed to the freight forwarder at Ho Chi Minh City airport. During transit, the aircraft experiences a pressure issue and water enters the hold, damaging 500 units. Risk has already transferred. The buyer, the UK fashion brand, must claim on the insurance policy that the seller arranged. The seller’s obligation was to arrange the insurance and pay the freight, not to bear the financial loss.
This is why understanding risk transfer is so important. “The seller arranged insurance” does not mean “the seller bears the risk.” As the buyer, you own the claim.
Under CIP, the seller must arrange cargo insurance. This is not optional. It is a contractual obligation built into the Incoterm.
Since Incoterms 2020, the minimum level of cover required under CIP is Institute Cargo Clauses A (ICC A). This is the most comprehensive level of standard cargo insurance available. It covers “all risks” of physical loss or damage, with specific exclusions for things like inherent defect, deliberate damage by the insured, and war/terrorism (which can usually be added as an extension).
The difference between Clauses A, B, and C in plain English:
Before 2020, CIP only required Clauses C (the same minimum as CIF). The 2020 upgrade to Clauses A is major. See the Incoterms 2020 section below for the full story.
What cover amount? The Incoterms rules state 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 check?
Even though CIP comes with insurance, ask your supplier for a copy of the certificate of insurance before the goods ship. Check: the insured amount (is it at least 110% of the goods value?), the policy level (is it Clauses A?), the currency (is it GBP if that is your contract currency?), and the named insured (it should be transferable to you as buyer, or name you directly).
“You have insurance” and “you have adequate insurance” are not always the same thing.
Control over the freight process. The seller arranges and pays for the main freight. This means the seller uses preferred carriers, negotiates their own rates, and controls the shipping schedule. Sellers who ship high volumes can use economies of scale on freight costs.
A complete, competitive quote. A CIP price is all-inclusive up to the buyer’s named place. For buyers who want a simple landed cost, a CIP price is easy to compare and evaluate. This can be a commercial advantage for sellers quoting against competitors who use EXW (Ex Works) or FCA (Free Carrier) terms.
Insurance is already arranged. The seller arranges Clauses A cover as part of the deal. There is no gap in cover during transit, and the seller can include the insurance cost within the overall price, often at competitive rates if they ship regularly.
Flexibility on transport mode. CIP works for any mode of transport, air, sea, road, or rail, so sellers do not need different Incoterms for different shipment types.
Clear, defined obligations. CIP is an all-mode Incoterm with a well-understood structure. When both parties understand it correctly, there is little room for dispute about who handles what.
Comprehensive insurance arranged by the seller. You do not have to arrange cargo insurance. The seller does it, and under CIP post-2020, the minimum level is Clauses A, comprehensive, all-risks cover. If something goes wrong in transit, you have a claim.
Simpler cost calculation. Your costs are predictable. You know the CIP price (which covers freight and insurance to your named place) and you add your import duties and customs clearance costs on top. There are no freight surprises.
No need to arrange freight. Freight logistics is the seller’s responsibility. If there is a vessel delay or a routing issue, the seller deals with it. You wait for the goods to arrive at the agreed place.
Works for all modes. Whether your goods are coming by air from the US, by sea in a container from China, or by road from Europe, CIP applies. You do not need to specify a different Incoterm for each mode.
Better than CIF for container shipments. CIP is the ICC-recommended replacement for CIF in containerised trade. It provides higher insurance cover and applies correctly regardless of the mode used.
The seller pays freight but does not control the goods after handover. Once the goods are handed to the first carrier, risk has transferred, but the seller is still paying the freight bill. If goods are delayed due to carrier error, the seller has limited financial interest in chasing the claim, yet the buyer may hold the seller commercially responsible for the disruption.
Insurance at Clauses A is more expensive. The 2020 upgrade from Clauses C to Clauses A cover increases the insurance cost the seller must absorb or pass on. For high-value or fragile goods, this cost can be major. Sellers who were quoting CIP under Incoterms 2010 at Clauses C rates may find their margins tighter under 2020 rules if they have not repriced.
Named destination must be chosen carefully. If the named CIP destination is the buyer’s premises, the seller’s freight contract must extend all the way there. Sellers should verify whether “named place” means a port terminal, a freight hub, or the buyer’s door, and price accordingly. “CIP London” is vague; “CIP buyer’s warehouse, Birmingham B1 1AA” is specific and avoids disputes.
Sellers carry all upfront costs. The seller pays for export clearance, main freight, and insurance, then invoices the buyer. In cash-flow terms, the seller has disbursed these costs before payment is received.
Military, dual-use, or restricted goods. Clauses A coverage can be restricted or excluded for certain cargo types, including arms, ammunition, and dual-use goods (items with both civilian and military applications). UK exporters in the defence or technology sector need to confirm their cargo is insurable under Clauses A before quoting CIP terms.
The buyer makes the insurance claim, not the seller. Under CIP, risk transfers to the buyer at origin. If goods are damaged, the buyer holds the insurable interest and must make the claim on the seller’s policy. This requires the seller to transfer the certificate of insurance and the buyer to deal with an overseas insurer, potentially in a different language and time zone.
Import duties and customs clearance are entirely the buyer’s responsibility. You will need a UK EORI number, a customs broker, and a customs declaration filed through CDS. If you are new to importing, this process can hold up your goods at the port. A common problem is arriving at Felixstowe or Southampton without the right documentation, and facing port storage charges while you sort it out.
Goods over £135 attract UK import VAT. Any goods imported into the UK with a customs value above £135 are subject to UK import VAT (currently 20%) at the border. This is separate from any customs duty. Under CIP, this is the buyer’s cost. If you were not expecting it, it can majorly affect your unit economics.
The named place matters more than you think. If you agree “CIP Southampton” and your warehouse is in Manchester, the seller’s freight contract ends at Southampton. You pay for the Manchester leg separately. Always specify the named place as the actual delivery point your business needs, not just the nearest port.
Limited visibility of carrier and transit details. The seller arranges the freight. As a buyer, you may have limited visibility of which carrier is being used, the routing, or the estimated arrival time, at least until the seller sends shipping documents. This can complicate your own warehouse planning.
CIP works well in the following situations.
When you want the seller to handle logistics but you also want comprehensive insurance included, CIP is the right choice. It is the strongest buyer protection in the C-group Incoterms.
For containerised sea freight, CIP is the ICC’s recommended alternative to CIF. The risk point (first carrier handover) aligns correctly with how containers actually move, unlike CIF’s “on board” point, which is technically wrong for FCL shipments.
For air freight, CIP works cleanly. Risk passes at airline acceptance; the seller arranges the airway bill and insures the goods for the flight.
For high-value goods, Clauses A insurance (which CIP now requires) is meaningfully better than the Clauses C minimum that applies to CIF. For electronics, machinery, pharmaceuticals, or luxury goods, this distinction is important.
When buying from a manufacturer who controls their own freight rates, CIP lets them pass on volume discounts within a clear Incoterm framework.
CIP is particularly common in manufacturing sectors, electronics, machinery, textiles, on trade routes from China, Vietnam, Bangladesh, and India to the UK, and for air freight shipments from the US and Europe.
Avoid CIP when you have your own freight forwarder and want control of the supply chain. If you have a preferred freight forwarder with competitive rates and a track record you trust, CIP removes that control. FCA (Free Carrier) is the better choice, the seller handles export clearance, but you arrange the main freight.
Avoid CIP when you want to choose your own insurer. Under CIP, the seller picks the insurer. If you have an existing marine cargo policy that covers all your imports, FCA or CPT terms allow you to keep your own insurance in place and avoid paying twice.
Avoid CIP when the named place is vague or incomplete. If you cannot agree on a specific named place, the freight contract will be ambiguous. This causes real disputes at destination. Nail down the exact address before agreeing CIP terms.
Avoid CIP when your goods include restricted items. Clauses A insurance may have exclusions for dual-use goods, arms, dangerous goods, or certain commodities. If your cargo falls into these categories, confirm insurability first.
Avoid CIP if you are under pressure to use sea-only Incoterms on a letter of credit. Some older letter of credit frameworks specify CIF. Check whether CIP is accepted by both banks before switching.
If CIP is not right for your situation, consider FCA (Free Carrier) for all-mode shipments where you want to control the freight, or CPT (Carriage Paid To) if you want the seller to pay freight but you will arrange your own insurance.
Mistake 1: Confusing “seller paid insurance” with “seller bears the risk.”
This is the most common misunderstanding. The seller arranges and pays for the insurance, but risk passes to the buyer at the first carrier. If goods are damaged in transit, the buyer must make the claim. Make sure your team understands this before goods ship.
Mistake 2: Accepting a vague named place.
“CIP UK” or “CIP Europe” is not a valid CIP contract. The named place must be specific enough for the seller to contract freight to it and for both parties to know when the seller’s cost obligation ends. Use a full address or a named facility.
Mistake 3: Not requesting a copy of the insurance certificate.
The seller must provide the buyer with the insurance certificate so the buyer can make a claim if needed. Not asking for this document before the goods ship means that if goods are damaged on arrival, you cannot claim. See the insurance section above for what to check on the certificate.
Mistake 4: Forgetting that CIP does not include import duties.
The CIP price covers everything up to your named place, except UK import duty and import VAT. Failure to account for these in your unit economics is a budgeting error that surprises many new importers. Check the commodity code and applicable duty rate before agreeing the deal. HMRC publishes customs duty rates and Incoterm guidance at gov.uk/guidance/customs-valuation/incoterms.
Mistake 5: Using an old Incoterms 2010 contract template.
Under Incoterms 2010, CIP only required Clauses C insurance. Under Incoterms 2020, the minimum is Clauses A. If you use an old contract template that specifies “CIP, Incoterms 2010,” you may receive only Clauses C cover. Always specify “CIP, Incoterms 2020” in your contract and check the insurance level in the certificate.
Mistake 6: Importing without a UK EORI number.
As the importer of record under CIP, you need a UK EORI number to clear goods through UK customs. You cannot import into the UK commercially without one. Register through HMRC, it typically takes 3–5 working days.
CIP (Carriage and Insurance Paid To) and CIF (Cost, Insurance and Freight) are often confused because both require the seller to arrange and pay for freight and insurance. The differences are major.
| Key Difference | CIP | CIF |
|---|---|---|
| Transport modes | All modes (sea, air, road, rail) | Sea and inland waterway only |
| Minimum insurance level | Institute Cargo Clauses A (all risks) | Institute Cargo Clauses C (named perils only) |
| Risk transfer point | When goods handed to first carrier at origin | When goods on board the vessel at port of shipment |
| Suitable for containers | Yes — risk point aligns with containerised shipping | Technically incorrect for FCL — risk point is at ship’s rail |
| Named place | Any named destination (not necessarily a port) | Named port of destination |
The most important practical difference is insurance. CIF only requires Clauses C cover, the bare minimum. CIP requires Clauses A, comprehensive, all-risks cover. For high-value goods, fragile cargo, or anything where a rejected insurance claim would be damaging, CIP provides majorly better protection.
The second key difference is mode of transport. CIF is strictly sea and inland waterway only. If your goods are moving by air, road, or rail, CIF does not apply. CIP does.
Choose CIP if you are importing by any mode, you want comprehensive insurance arranged by the seller, or you are shipping in containers (where CIF’s risk point is technically wrong).
Choose CIF if your supplier insists on it for a purely sea shipment and you are prepared to supplement the minimum Clauses C cover with your own policy.
CPT (Carriage Paid To) is the closest relative to CIP, the only difference is insurance.
| Key Difference | CIP | CPT |
|---|---|---|
| Transport modes | All modes | All modes |
| Insurance obligation on seller | Yes — Clauses A minimum | No — seller has no insurance obligation |
| Buyer arranges own insurance | Not required | Yes — buyer must arrange |
| Risk transfer point | When goods handed to first carrier | When goods handed to first carrier |
| Cost coverage to named destination | Yes | Yes |
Under CPT, the seller pays freight to the named destination, exactly like CIP, but does not arrange insurance. The buyer bears the risk during transit and must arrange their own marine cargo policy.
Choose CIP if you want the seller to arrange comprehensive insurance as part of the deal, or if you do not have your own marine cargo policy in place.
Choose CPT if you already have a marine cargo insurance policy that covers your imports, or if you want to use your own insurer with your preferred terms and excess levels.
CIP applies to all transport modes: sea, air, road, and rail. This is one of the features that makes it more versatile than CIF and CFR (Cost and Freight), which are restricted to sea and inland waterway only.
What this means in practice:
For sea freight (FCL and LCL), CIP is the correct all-mode alternative to CIF for containerised shipments. Risk passes at the container freight station or when goods are handed to the shipping line, which is the right point for containerised cargo.
For air freight, CIP works cleanly. Risk passes at the airline’s acceptance of the goods. The seller arranges the airway bill and insurance covers the flight and ground handling.
For road freight, including UK-EU trade, CIP is appropriate. Post-Brexit, both parties need to be aware of customs requirements at the UK-EU border.
For multimodal transport, where goods travel by more than one mode. CIP is explicitly designed to work. CIF cannot properly cover multimodal movements.
The container problem with CIF (and why CIP fixes it):
Under CIF, risk passes “on board the vessel.” For containerised cargo, this is problematic. The shipper hands goods to the terminal operator, who loads the container, which is then lifted onto the ship. At what exact moment is a container “on board”? The ICC resolved this ambiguity in CIP, where risk transfers at the first carrier handover, a clean and unambiguous point in containerised logistics. This is one reason CIP is now the ICC’s recommended choice for containerised shipments.
Yes. CIP changed majorly in Incoterms 2020, and the change directly affects buyers.
The change: insurance minimum upgraded from Clauses C to Clauses A.
Under the previous Incoterms 2010 rules, CIP only required the seller to provide insurance at Institute Cargo Clauses C level. Clauses C is the minimum standard, it covers only a narrow list of named perils (fire, explosion, stranding, sinking, collision, and jettison). It does not cover water ingress, theft, or many of the most common transit incidents.
Under Incoterms 2020, CIP now requires Institute Cargo Clauses A as the minimum. Clauses A is “all risks” cover, it covers all physical loss or damage except for explicitly excluded items (inherent defect, packing failure, war, and a few others that can often be added as extensions).
Why did the ICC make this change?
CIP is used heavily for high-value goods, containerised shipments, and air freight. The ICC determined that Clauses C cover was inadequate for these uses. They upgraded the minimum to Clauses A so that CIP provides genuinely meaningful protection.
What does this mean if your contracts still reference Incoterms 2010?
If your supplier quotes “CIP, Incoterms 2010,” they are only obligated to provide Clauses C cover. That is legally valid, but it means you are not getting the protection that CIP 2020 provides. Make sure your contracts specify “Incoterms 2020” if you want Clauses A cover as the baseline.
Can you agree a different level?
Yes. The parties can agree in writing to a higher or lower level of insurance. The rules set a floor, not a ceiling. In practice, there is little reason to go below Clauses A under CIP 2020, but it is possible if both parties agree and document it.
All other aspects of CIP, risk transfer point, cost allocation, mode applicability, and party responsibilities, remained unchanged from Incoterms 2010. Only the insurance minimum changed.
CIP is well-suited to UK trade, but there are several UK-specific points every shipping coordinator should know.
You are the importer of record. Under CIP, you, the UK buyer, handle and pay for UK import customs clearance. This means you need a UK EORI number. Without one, you cannot import goods commercially into the UK. If you do not have an EORI number yet, register through HMRC, it typically takes 3–5 working days to process.
Import customs declarations go through CDS. The UK’s Customs Declaration Service (CDS) replaced the old CHIEF system in November 2023. All UK import declarations must now go through CDS. Your customs broker should be using CDS, if they mention CHIEF, clarify.
UK import duty applies. Once your goods arrive, you will owe UK import duty at the rate set for the commodity code of your goods. You can check rates using the UK Global Tariff. HMRC’s customs valuation guidance, including how CIP affects the customs value of your goods, is published at gov.uk/guidance/customs-valuation/incoterms.
UK import VAT applies. Goods imported into the UK over £135 in customs value 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 businesses, postponed VAT accounting is the standard approach.
The £135 de minimis threshold. If individual consignments are valued at £135 or less (customs value, not including shipping), UK import VAT is collected at the point of sale rather than at the border. For most UK businesses importing commercial quantities, values will exceed £135, but it is worth knowing if you import samples or low-value items.
Port of entry. For sea freight, Felixstowe handles the majority of UK container imports. Southampton is a major alternative for some trade lanes. For road freight from Europe, Dover is the primary entry point. The port of entry affects your customs broker and any port storage arrangements.
You handle UK export customs clearance. As the seller under CIP, you are responsible for export clearance in the UK. You will need a UK EORI number and must file an export declaration through HMRC’s systems. This is typically done by a freight forwarder or customs agent on your behalf.
Post-Brexit customs. Since the UK left the EU customs union at the end of 2020, all goods moving between the UK and EU member states require customs formalities. As a UK exporter selling on CIP terms to an EU buyer, you handle UK export clearance. The EU buyer handles EU import clearance and pays any EU import duties on their side.
Arranging insurance. As the seller under CIP, you must arrange Clauses A cargo insurance. If you ship regularly, your freight forwarder or insurer may offer an open cover policy that automatically covers each shipment under agreed terms, this is more efficient than arranging individual policies per shipment and typically cheaper.
Here is a realistic worked example to make CIP concrete.
The scenario: A UK homeware retailer. Cotswold Home, orders 3,000 ceramic mugs from a manufacturer in Jingdezhen, China. The contract is agreed on CIP Birmingham Distribution Centre, Incoterms 2020.
Goods value: £18,000
What happens:
The Chinese manufacturer packs the mugs, arranges export clearance through Chinese customs, and organises a freight forwarder to collect the goods from the factory. The freight forwarder picks up the mugs and delivers them to the container freight station (CFS) in Ningbo port.
At the moment the mugs are handed to the carrier at the CFS, risk transfers to Cotswold Home. The goods are still in China.
The manufacturer’s freight forwarder arranges a freight contract from Ningbo to Felixstowe, plus last-mile delivery to Birmingham. The manufacturer also takes out a marine cargo insurance policy at Clauses A level, covering £19,800 (the goods value of £18,000 plus 10%).
The container ship travels from Ningbo to Felixstowe. During transit, one pallet of mugs shifts in the container and 200 units are broken on arrival. This happens after risk has transferred to Cotswold Home.
At Felixstowe, Cotswold Home’s customs broker files the UK import declaration through CDS. Cotswold Home pays UK import duty (the duty rate on ceramic mugs under UK Global Tariff is currently 0%, but they still pay UK import VAT at 20%, on £18,000 that is £3,600, handled via postponed VAT accounting).
The goods are delivered to the Birmingham warehouse.
Cotswold Home discovers the 200 broken mugs. They contact the seller for the insurance certificate, file an insurance claim with the insurer, and receive a settlement of around £1,200 for the 200 mugs. The seller does not bear this cost, it comes from the insurance policy the seller arranged.
The key lesson: Cotswold Home received comprehensive Clauses A insurance through the CIP contract, which meant the broken mugs were recoverable through a valid claim. Had the contract been CPT instead of CIP, Cotswold Home would have had no insurance and the £1,200 loss would have been entirely theirs.
CIP stands for Carriage and Insurance Paid To. It is one of the 11 Incoterms 2020 rules published by the International Chamber of Commerce (ICC). Under CIP, the seller pays for freight and insurance to a named destination, but risk passes to the buyer when goods are handed to the first carrier at origin.
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, while CIP applies to all modes. CIF requires only minimum insurance (Clauses C, named perils); CIP requires Clauses A (all risks). CIF’s risk point is “on board the vessel” at the port of shipment, which is technically wrong for containerised cargo; CIP’s risk point is the first carrier handover, which is correct for containers. For most modern shipping, CIP is the better choice.
Under Incoterms 2020, the seller must provide insurance at Institute Cargo Clauses A (all risks) level, for a minimum of 110% of the contract value. This is the most comprehensive standard cargo insurance available. Under the previous Incoterms 2010 rules, CIP only required Clauses C (minimum cover), so always check which version of Incoterms your contract references.
For most buyers, yes. CIP provides better insurance cover (Clauses A vs Clauses C), applies correctly to containerised and air freight, and uses a cleaner risk transfer point. The only scenario where CIF might be preferred is if the seller insists on it and your bank requires CIF on a letter of credit, but even then, CIP is the ICC’s recommended alternative.
CIP and CPT are identical except for insurance. Under both, the seller pays freight to the named destination and risk passes at the first carrier handover. Under CIP, the seller must also arrange Clauses A cargo insurance. Under CPT, the seller has no insurance obligation, the buyer must arrange their own cover. If you already have a marine cargo policy covering your imports, CPT gives you more control. If you do not, CIP is safer.
The buyer pays all import duties and taxes. The CIP price covers everything up to the named destination, but not UK import duty, UK import VAT, or customs clearance costs. As the UK buyer, you will need a UK EORI number, a customs broker, and you must file a UK customs declaration through CDS.
Avoid CIP when you want to control your own freight and use your own freight forwarder (use FCA instead), when you have your own comprehensive marine cargo policy and do not need the seller to arrange insurance (use CPT instead), or when your cargo is a restricted type that may be excluded from standard Clauses A cover. Always specify Incoterms 2020 in your contract, not Incoterms 2010.
Yes. CIP applies to all transport modes, including road. Post-Brexit, goods moving by road from the EU to the UK require customs declarations on both sides of the border. Under CIP, the EU seller handles EU export clearance; the UK buyer handles UK import clearance and needs a UK EORI number and a CDS declaration. Name the delivery address precisely in the contract, “CIP UK” is too vague.
Article: cip-incoterm | ShippingEducation.co.uk | Published June 2026 | Incoterms 2020
Internal links: FCA Incoterm | CPT CPT IncotermIF Incoterm | Incoterms Explained
External: HMRC Customs Valuation. Incoterms
This article is part of a learning path — return to explore more topics.
Keep reading
What is a bonded warehouse? A bonded warehouse, formally called a customs warehouse in UK law, is an HMRC-approved facility where imported goods can be
What is AEO certification? AEO, Authorised Economic Operator, is a “trusted trader” status granted by HMRC. It shows that your business has been audited and
What is a shipping container? A shipping container is a standardised steel box built to carry goods by sea, rail, or road. Containers are designed
What is a freight forwarder? According to FIATA (the International Federation of Freight Forwarders Associations), freight forwarders are “companies that organise shipments for individuals or
What is landed cost? Landed cost is the total cost of getting a product from a supplier’s factory to your door in the UK. It
What is a T1 document? A T1 document is a customs transit document used to move goods that have not cleared customs through one or