Carriage and Insurance Paid To

GLOSSARY

CIP (Carriage and Insurance Paid To)

CIP (Carriage and Insurance Paid To) is an Incoterm where the seller is responsible for the delivery of goods to an agreed destination in the buyers country, and must pay for the cost of this carriage. The sellers risk however, ends once they have placed the goods on the ship, at the origin destination. The buyer can pay for additional insurance during carriage of the goods.

What is CIP(Carriage and Insurance Paid To)?

CIP (Carriage and Insurance Paid To) is an Incoterm where the seller is responsible for the delivery of goods to an agreed destination in the buyers country, and must pay for the cost of this carriage. The sellers risk however, ends once they have placed the goods on the ship, at the origin destination. The buyer can pay for additional insurance during carriage of the goods.

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Key takeaways:

The seller is responsible for the cost of carriage as well as all-risk insurance coverage.

Insuring the goods is not an item to overlook if you are the seller and it is important to check your minimum insurance and levels of cover, additional insurance may be required.

CIP is similar to CPT. What is different with CIP is the fact that the buyer has paid an additional sum to have the goods insured during the carriage of the goods.

Carriage and Insurance Paid To (CIP) is typically used in conjunction with a destination.

CIP is applicable for multimodal shipments and works well for shipments supported by a letter of credit.

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Seller's obligations under the CIP Incoterm:

1.The seller must deliver the goods, commercial invoice, and any evidence of conformity.

2.Deliver the goods to the carrier on the agreed date or period.

3.Until the goods are delivered, the seller assumes all risk of loss or damage.

4.Contract carriage of goods until the place of destination.

5.Insure the goods at maximum.

6.Provide the usual transport document and dated within the agreed shipment period. Full set of originals if the document is negotiable.

7.All export clearance expenses (license, security, inspection, etc). Assist with import clearance

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Buyer's obligations under the CIP Incoterm:

1.The buyer must pay the price of goods as agreed.

2.The buyer takes the goods from the carrier at the place of destination or at the point.

3.All risk of loss/damage from the time or end of the period agreed for delivery. If the buyer fails to give notice of the place of destination, the risk is under the buyer.

4.No obligation to contract a carrier.

5.Assist with export clearance. Pay for import clearance and formalities (licenses, security, official documentation).

6.Pay from the time goods delivered. Transit cost not under sellers account. Unloading cost not related to the contract of carriage. Additional insurance not under the seller account. All costs for assistance. Pay duties and taxes for imports. Any additional cost if does not notify the shipment date or period.

7.Time or period for dispatching the goods and name the point of receiving the goods.

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The difference of CIP and CPT:

CPT is carriage paid to, whereas CIP is carriage insurance paid to. In CPT, the seller does not insure the freight, but in CIP, goods are insured. Due to the fact that the goods are not insured in CPT, damage may result in a loss. In CIP, the goods are insured, and hence damage may not result in a loss.

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Related Terms:

CPT