CIF vs CIP Insurance: Compare the Contractual Cover Requirement
Under Incoterms 2020, the default insurance requirements differ: CIF retains a minimum based on Institute Cargo Clauses (C), while CIP generally requires Clauses (A) or similar cover, unless the parties agree otherwise.
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Is the insurance requirement the same under CIF and CIP?
Under Incoterms 2020, the default insurance requirements differ: CIF retains a minimum based on Institute Cargo Clauses (C), while CIP generally requires Clauses (A) or similar cover, unless the parties agree otherwise. These contractual purchasing obligations do not make every loss insured. The actual policy, exclusions, valuation and journey still need to be checked.
Confirm the edition and any agreement to vary it
ICC's explanation of the 2020 changes describes the different CIF and CIP defaults and the ability to agree a different level. An older contract, modified clause or ambiguous reference should not be read as if the standard 2020 wording necessarily applies unchanged.
Also check whether the chosen term suits the transport arrangement. CIP can be used for multimodal carriage; CIF is a sea or inland-waterway term. The named destination and the place where risk transfers should be understood separately. Obtain the relevant contract advice before relying on an assumed allocation.
Compare the insurance evidence itself
| Item | Question for the buyer and seller |
|---|---|
| Cover basis | What clauses and endorsements are actually issued? |
| Insured value | Which value, charges and currency are included? |
| Journey | Where does cover attach and terminate? |
| Claimant rights | Who can present a claim and obtain documents? |
| Exclusions | Which relevant causes or circumstances are excluded? |
| Additional needs | Does the cargo require agreed extensions? |
Do not use “all risks” as shorthand for unlimited protection. Delay, inherent characteristics, packing issues and other exclusions can require particular attention under the actual terms. A certificate should be read with the wording it incorporates, not treated as a complete explanation on its own.
A fictional purchase of delicate equipment
A buyer agrees a trade term requiring insurance and receives a short certificate. The equipment is vulnerable to handling damage and will pass through an additional warehouse. The buyer should confirm whether the issued cover and declared journey match those circumstances, rather than assuming that the seller's contractual obligation guarantees the buyer's preferred protection.
Resolve the discrepancy before shipment where possible. Keep any agreement to increase or change cover in writing and distinguish the request from the insurer's acceptance. A seller's assurance does not itself amend an insurer's contract.
Use the right documents if damage occurs
Preserve the sale contract, insurance certificate, incorporated clauses, invoice and transport records. A dispute over whether the seller obtained the promised insurance is different from a claim under the insurance actually issued. Both may need careful review, but neither should be decided from the three-letter term alone.
See the cargo quote valuation comparison guide, review cargo insurance information, and submit the proposed cover basis and journey for assessment.
Key takeaways
- Confirm the applicable edition and any variation.
- Compare actual insurance documents against the contractual requirement.
- Separate minimum compliance from the cargo's practical protection needs.
Frequently asked questions
Is the insurance requirement the same under CIF and CIP?
Under Incoterms 2020, the default insurance requirements differ: CIF retains a minimum based on Institute Cargo Clauses (C), while CIP generally requires Clauses (A) or similar cover, unless the parties agree otherwise. These contractual purchasing obligations do not make every loss insured. The actual policy, exclusions, valuation and journey still need to be checked.
Sources & further reading
General information, not a coverage determination or offer. Actual cover is subject to policy wording, insurer terms, underwriting and applicable law.