CIF vs CIP: CIF for Sea, CIP for Containers and Air

CIF and CIP are easy to confuse because both put freight and insurance to destination on the seller. But the transport mode, the insurance level, and the point where risk transfers all differ. Reaching for CIF out of habit on containerized or air cargo puts the rule out of sync with how the goods actually move.

For each rule on its own, see CIF explained and CIP explained; for the full map of all 11 rules, see the complete Incoterms 2020 guide.

What CIF and CIP Share, and Where They Split

Shared: both are Group C, so the seller pays freight and insurance to destination, and risk passes to the buyer well before the destination.

Different: CIF is for sea and inland-waterway only with minimum insurance; CIP works for every mode with top-tier insurance.

The Three Core Differences

The three are linked. CIF assumes conventional sea cargo such as bulk and sets "on board" as the risk basis; CIP assumes containers, air, and multimodal and sets "handover to the first carrier" as the basis.

Insurance Level Is the Biggest Practical Difference

The same incident is covered differently.

• CIF's ICC Clause C is minimum cover for major casualties only, such as sinking, stranding, or fire. Ordinary damage like breakage or theft is excluded.
• CIP's ICC Clause A covers effectively all risks except listed exclusions and insures 110% of the value.

So even when you leave insurance to the seller, under CIF the buyer must check the cover and negotiate additional insurance if needed. The gap matters most for high-value or delicate cargo.

The Risk-Transfer Point Differs Too

CIF transfers risk once the goods are on board at the load port. CIP transfers risk when the seller hands the goods to the first carrier. Picture a container and CIP's basis matches reality: a container is handed to the carrier at the CY, not loaded on board directly.

For Containers and Air, Use CIP, Not CIF

The key practical takeaway. For containerized (FCL/LCL), air, or multimodal cargo, CIP is the accurate rule. CIF assumes loading on board, which misaligns with a container's actual delivery point, and its insurance is only minimum cover.

• Sea bulk / conventional cargo + seller insurance → CIF
• Containers / air / multimodal + seller insurance → CIP

CIF is used for containers out of habit, but switching to CIP avoids both the risk-timing mismatch and the insurance gap.

Import Duty Is on a CIF Basis for Both

Korea assesses import duty on a CIF-based customs value (goods + freight + insurance). Whether CIF or CIP, freight and insurance are already in the amount, so the contract amount is the starting point for the customs value.

So Which Fits Your Deal

• Sea bulk or conventional cargo with the seller handling transport and insurance → CIF
• Containers, air, or multimodal with the seller handling transport and insurance → CIP
• High-value cargo needing broad insurance → CIP, which carries ICC A, over minimum-cover CIF

If you are unsure which rule matches your mode and cargo, we can work through it with you based on cargo type, destination, and the level of insurance you need.

This guide is for general information. Actual contracts depend on the detailed rules and each deal, so confirm against the ICC rules and with a specialist.