What is Cost, insurance and freight (CIF)?
Cost, insurance, and freight (CIF) is an international transportation agreement used when cargo is transported via waterway or sea. Under CIF, the seller is responsible for the shipping costs, insurance premiums, and freight of the buyer’s shipment. The full form of CIF is Cost, insurance, and freight.
Cost, Insurance, and Freight (CIF) is a common trade term or “Incoterm” that describes who pays for what and who is responsible for what when things are shipped from one country to another. CIF is mostly used for shipping by sea and is a deal between the exporter and the importer about different parts of the shipment. CIF can be further broken down as :
1. Cost (C): This indicates how much the thing itself costs. It’s how much you’re willing to pay for what you want.
2. Insurance (I): During the time the thing is being delivered to you, it could be damaged or lost. Through CIF, the buyer gets insurance that covers the item while it’s being shipped. Having insurance allows for reimbursement for items if they are destroyed in transit.
3. Freight (F): This is the cost for the seller to deliver the item to you. It’s the same as having to pay for handling and shipping. This shipping cost is taken care of by the seller.
Table of Content
- Characteristics of Cost, insurance and freight (CIF)
- Example of Cost, insurance and freight (CIF)
- Advantages of Cost, insurance and freight (CIF)
- Disadvantages of Cost, insurance and freight (CIF)
- Difference between Cost Insurance Freight and Free On Board ( CIF vs. FOB )
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