What Is CIF (Cost, Insurance, Freight)?
CIF (Cost, Insurance, and Freight) means the seller pays for goods, freight to destination port, and marine insurance. However, risk transfers to buyer when goods are loaded onto the ship at origin.
Key point: Seller pays for insurance, but you bear the risk. Insurance protects you as the risk-holder.
Who Pays for What Under CIF
| Cost/Risk | Seller | Buyer |
|---|---|---|
| Export packaging | ✓ | |
| Export customs clearance | ✓ | |
| Ocean freight | ✓ | |
| Marine insurance (minimum) | ✓ | |
| Risk during transit | ✓ | |
| Import customs clearance | ✓ | |
| Import duties/taxes | ✓ | |
| Delivery from port | ✓ |
Risk transfer: When goods cross ship's rail at origin port.
Insurance note: CIF only requires minimum coverage (Institute Cargo Clauses C). This covers major casualties but NOT theft, damage from handling, or many common risks.
CIF vs FOB: Key Differences
| Aspect | FOB | CIF |
|---|---|---|
| Freight paid by | Buyer | Seller |
| Insurance paid by | Buyer | Seller |
| Risk transfer | At origin port | At origin port |
| Typical use | When buyer controls logistics | When seller handles logistics |
| Price comparison | Lower quoted price | Higher quoted price |
Same risk, different costs: Both FOB and CIF transfer risk at the same point. CIF just means seller handles freight booking and insurance.
When to Use CIF
Good for:
- Buyers who don't want to arrange freight
- Letter of Credit transactions (banks prefer CIF)
- When seller has better freight rates
- One-off shipments
Consider FOB instead when:
- You have established freight forwarder relationships
- You want control over insurance coverage
- You're consolidating from multiple suppliers
- You want to compare freight costs independently
Important: Always verify CIF insurance coverage is adequate. Consider requesting Institute Cargo Clauses A (all-risks) or arranging your own supplemental insurance.