Carriage and Insurance Paid to (CIP): Definition and Example

Carriage and Insurance Paid to (CIP) is an Incoterm that means the seller pays for the carriage of the goods to the named place of destination and also for the insurance of the goods up to the point of destination. The buyer is responsible for unloading the goods at the destination.

CIP is a relatively expensive Incoterm because it includes the cost of insurance. However, it can be a good option for buyers who want to ensure that their goods are covered in the event of damage or loss during transit.

Here is an example of how CIP might be used in a transaction:

A seller in China agrees to sell goods to a buyer in the United States. The agreed price is $10,000. The seller arranges for the goods to be shipped by sea from China to the United States. The seller also takes out an insurance policy on the goods for the duration of the journey.

When the goods arrive in the United States, the buyer is responsible for unloading them and paying any import duties or taxes. The buyer is also responsible for any damage to the goods that occurs after they are unloaded.

In this example, the seller has used CIP because it allows them to pass on the cost of insurance to the buyer. This can be a good option for sellers who are not confident in their ability to assess the risks involved in shipping goods internationally.

CIP is a good option for buyers who want to ensure that their goods are covered in the event of damage or loss during transit. However, it is a relatively expensive Incoterm, so buyers should weigh the cost of insurance against the benefits of using CIP.