|What is the difference in duty of insurance between CIF and CIP?
We frequently receive requests for marine insurance quotations, but often without enough information to advise on whether the quotation should be for CIF or CIP.
According to Incoterms 2000, CIF stands for Cost, Insurance and Freight (… named port of destination), which means that the seller delivers when the goods to the port of shipment. CIP stands for Carriage and Insurance Paid To (… named place of destination), which means that the seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination.
The major difference to the seller of transporting goods under CIF or CIP is that under CIF, the seller only needs to take out marine insurance against the buyer's risk of loss of or damage to the goods during the sea or inland waterway journey. Under CIP, in addition to marine insurance, the seller also needs to take out cargo insurance to cover the risk of loss of or damage to the goods during transportation from the discharge port to the named destination.
If you are a seller, check carefully if they are transporting goods under CIF or CIP terms in order to ascertain what insurance cover theey need. If you are a buyer, please check if your sellers have taken out insurance that covers your goods only to the port of shipment.
As an insurance professional, by carefully checking customers' trade terms we can provide services over and above simply quoting a marine policy. These value-added serices can help us better understand our customers' trade practices and also help us guide them into taking out the marine cargo insurance that suits their needs best. More importantly, iin the event of any claims, they will not be prejudiced by the insurer.