CIF (Cost, Insurance and Freight)

CIF (Cost, Insurance and Freight) is a commonly used trade term in international trade, belonging to the shipment contract terms under the Incoterms rules. It means the seller is responsible for concluding the contract of carriage to bring the goods to the named port of destination and paying the freight and insurance costs; however, the risk transfers to the buyer once the goods pass the ship's rail (or are loaded on board) at the port of shipment. CIF applies only to sea and inland waterway transport. Usage scenarios: when the seller wishes to control transport and insurance arrangements, or when the buyer lacks logistics capabilities. Points to note: the seller must insure under usual conditions with minimum coverage (e.g., FPA) unless otherwise agreed; freight and insurance are paid only to the port of destination and do not include unloading costs; the point of risk transfer differs from the point of cost division (risk transfers at the port of shipment, costs at the port of destination). Compared with FOB, under CIF the seller bears freight and insurance; compared with CFR, CIF adds the insurance obligation; compared with DES, CIF is a shipment contract while DES is an arrival contract. Foreign trade practitioners should note: CIF is not 'landed price'; risk still transfers at the port of shipment; the insurance beneficiary is usually the buyer; documentation requirements are strict, such as bill of lading, insurance policy, invoice, etc.