CIF Incoterms | Cost, Insurance, & Freight Trade Terms - SeaRates (2024)

FAQs

What is CIF Incoterms insurance coverage? ›

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 ...

When goods are bought or sold via “Cost, Insurance, and Freight” (CIF) it means that the Seller is responsible for delivery of the goods to a ship, loading the goods onto the ship, and insuring the shipment until it reaches the port of destination.

Cost, insurance, and freight (CIF) is 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.

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).

Cost, Insurance and Freight (CIF) is an Incoterm rule that is identical to the CFR Incoterm rule except in one aspect: insurance. Even though the risk transfers to the seller upon loading the goods on board the vessel, in CIF, the seller is obliged to take out insurance cover for the buyer's risk.

One of CIF's main disadvantages is that the seller can only use it for specific types of international trade. This means sellers must ensure they obtain the right shipping policy for the entire cargo journey. Another disadvantage of CIF is that it might be hard for the buyer to take out a claim if anything goes wrong.

Under CIF, the seller is responsible for providing protection for the goods in transit, in addition to covering the cost and freight to the delivery port. Under CFR, the exporter covers the cost and freight but doesn't provide insurance; the buyer must arrange and pay for it.

Under CIF, the seller bears the risk of loss or damage to the goods until they are delivered at the port to the first carrier. However, once the goods are delivered and unloaded at the port, the buyer assumes all risks.

CIF Incoterms will usually define the beneficiary as the seller, and if your shipment is damaged, you may only find out after the container is unloaded, and you have paid the final amount to your seller. In that event, the seller completed the transaction and the insurance claim would go to the seller, not the buyer.

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.

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.

CIF agreements offer several advantages for buyers, such as reduced risk, lower costs, and ease of shipping. However, there are also some disadvantages to consider, such as lack of control over the shipping process, potential for hidden costs, and the need to be familiar with customs procedures.

CIF stands for Cost, Insurance, and Freight. These are the fees a seller pays to cover the costs, Cost And Freight. : Cost refers to the cost of goods and freight refers to all other costs relating to all the means o.

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.

List of Incoterms explained. Incoterms are categorized into two main groups to facilitate understanding and application in international trade: 7 rules for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP). 4 rules for sea and inland waterway transport (FAS, FOB, CFR, CIF).

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.

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.

The Claims Inquiry Form (CIF) is used to request an adjustment for either an underpaid or overpaid claim, request a Share of Cost (SOC) reimbursem*nt or request reconsideration of a denied claim. The CIF can also be used as a tracer.