CIP or Carriage Insurance Paid To is an Incoterm used in international trade, under which the seller is responsible for transportation and insurance cost to ship the cargo to the destination port.
However, the responsibility is transferred to the buyer from the seller just as the goods are loaded on to the first carrier. The seller is not held responsible until the goods reach the destination port.
How It Works:
- The seller prepares and dispatches the goods.
- The seller arranges transportation to the agreed destination.
- Insurance coverage is purchased by the seller.
- Risk transfers to the buyer once the goods are handed over to the first carrier.
- The buyer handles import clearance and final delivery.
Benefits:
- Provides insurance coverage during transit.
- Applicable to air, sea, rail, and road transport.
- Offers flexibility in multimodal logistics.
- Reduces risk exposure for buyers.
Example:
Under CIP, an Indian exporter ships the cargo to Berlin, and pays for the transportation and insurance. But the responsibility shifts to the buyer when goods reach the first carrier.