CIP Delivery Term (Carriage and Insurance Paid To)

CIP, short for Carriage and Insurance Paid To, is one of the 11 Incoterms introduced in 2010. In Turkish, it is translated as “Taşıma ve Sigorta Bedeli Ödenmiş Olarak Teslim”. Under the CIP delivery term, the exporter (seller) is responsible for delivering the goods to the designated carrier. During this process, the seller must fulfill specific obligations. In addition to delivering the goods to the carrier, the seller is also responsible for paying the freight cost up to the destination point and arranging insurance for the goods.

The CIP term mandates the seller to purchase insurance. According to existing rules, CIP can be used with all modes of transport—sea, land, air, and rail.

What Is the CIP Delivery Term?

CIP is known as one of the obligatory delivery terms and comes with several features. During export customs clearance, the exporter is responsible for fulfilling all necessary procedures, including permits, taxes, and fees.

CIP allows the seller to deliver the goods to a carrier they appoint. Thus, the seller fulfills their delivery obligation. The seller also covers the cost of transportation up to the location agreed with the buyer and must insure the goods against potential risks. The insurance premium is also paid by the seller, making this coverage mandatory under the CIP term.

While selecting a carrier, a proper transport contract must also be made. Paying the freight and insurance until the destination point are key obligations of the seller.

Where Is the CIP Delivery Term Used?

The International Chamber of Commerce has classified maritime trade practices into two main groups for better understanding. CIP falls under the group that includes rules applicable to multiple transportation methods. It is frequently used in multimodal transport and provides coverage for freight and insurance costs.

Because it adapts well to different transport modes, CIP is considered a multi-modal transport method. Under this term, a contract is made based on the seller’s obligation to transport the goods to a pre-agreed destination. As such, the freight cost (freight charges) is covered by the seller.

Although the seller carries the majority of responsibilities, the buyer also assumes certain roles. For example, the seller insures the goods on behalf of the buyer to protect them against risks like damage or loss during transport. The requirement for cargo insurance ultimately benefits both parties.

In Which Modes of Transportation Is CIP Used?

CIP is one of the most widely used Incoterms across various transportation modes. It can be applied in:

• Air freight

• Rail transport

• Maritime shipping

• Road transport

• Multimodal shipments

This makes CIP particularly valuable in international trade operations. One of the major advantages of CIP is that it reduces the seller’s risk and expenses while still offering flexibility to the buyer, who can also arrange additional insurance independently if desired.

Responsibilities of Buyer and Seller in CIP Terms

Just like other Incoterms, CIP assigns specific responsibilities to both buyer and seller.

• The seller must prepare the goods in accordance with the agreement and ensure that they are properly packed, labeled, and documented.

• The seller must handle all export customs formalities in the country of origin and ensure that the goods meet the import regulations of the buyer’s country.

• The seller is responsible for signing a contract with a freight forwarder and for paying the freight and insurance until the agreed delivery point.

• The buyer is responsible for the import customs clearance in their own country and assumes the risk of the goods once they are delivered to the carrier.

This distinction helps prevent misunderstandings in international logistics and ensures that risk, cost, and liability are clearly distributed between parties.