CIF— Cost, Insurance and Freight(Tiền hàng, bảo hiểm và cước)

Delivery & risk transfer

As under CFR, delivery and the transfer of risk take place once the goods are on board at the loading port, while the seller pays freight and insurance through to destination. A loss at sea is claimed by the buyer under the policy the seller bought.

Cost split

Seller: origin costs, export clearance, ocean freight to the destination port and the insurance premium. Buyer: import clearance, duties, discharge (if not already in the freight) and the inland leg.

Insurance

The seller need only provide minimum cover (Clauses C), for at least 110% of the contract value in the contract currency, from the loading port to the destination port. For higher-value cargo, wider cover must be negotiated in the contract, or the buyer tops it up itself.

Watch out for

• The default Clauses C cover is narrow (only listed perils such as fire, stranding and sinking) and is not enough for electronics or fragile goods. Negotiate Clauses A or B where needed.
• Risk still passes at the loading port, as under CFR. The insurance compensates for that risk; it does not make the seller “responsible to destination”.
• Containers should move under CIP rather than CIF; CIF is for sea and inland-waterway transport only.