Difference Between CIP and CIF
The key differences between CIP and CIF are actually the scope of insurance coverage and the seller’s degree of liability. CIP provides more comprehensive insurance coverage and covers the entire journey to the designated destination, whereas CIF focuses primarily on marine transport to a specific port, with the buyer assuming responsibility for the remainder of the transportation and delivery. The selection between the two depends on the particular requirements and preferences of the parties to the global trade transaction.
|
Basis |
CIF |
CIP |
|---|---|---|
| Full Form | Cost Insurance and Freight | Carriage and Insurance Paid To |
| Insurance Responsibility | In CIF contracts, the seller is responsible for getting insurance coverage for the products during their sea journey to the port of destination specified in the contract. The seller pays for insurance coverage. | In CIP contracts, the seller is also responsible for getting insurance coverage, but this insurance covers the products for every phase of the journey, including any land transportation or delivery to the specified destination. Again, the insurance is paid for by the seller. |
| Delivery Point | When the products are loaded onto the vessel at the port of shipment, the seller’s responsibility ends under CIF terms. The buyer bears the risk and expense for the next journey and delivery to the final destination. | In CIP contracts, the seller is liable until the products are delivered to the specified location. This includes the sea journey as well as any extra transportation, offloading at the destination, and related expenses. |
| Transportation Responsibility | CIF refers primarily to the sea transportation of goods. The buyer is responsible for inland transportation, unloading, and any additional expenses incurred after the products have been carried onto the vessel and the seller has arranged and paid for the main transport by sea. | CIP is flexible because it covers the entire voyage from the seller’s location to the specified destination, regardless of the mode of conveyance (sea, air, or land). The seller is responsible for arranging and paying for all transportation costs associated with this trip. |
| Flexibility | CIF is typically used for transfers involving ocean transport and port-to-port delivery, making it less flexible in terms of choice of destination. | As the seller’s responsibility extends beyond the port, CIP provides greater flexibility, allowing parties to choose from a wider array of destinations, including inland locations. |
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