CIP Incoterms: Who’s Actually Responsible for What?

If you’re here, you’re probably trying to figure out who’s on the hook in a CIP shipment—maybe because a container went missing halfway through a multimodal run, or someone’s arguing over who should’ve filed the claim. CIP Incoterms get tossed around like they mean “seller pays, buyer relaxes”—but that’s not how this works.

Here’s the no-fluff version of what CIP (Carriage and Insurance Paid To) actually means, who does what, and how it differs from the similar-sounding Incoterms that get people in trouble when they assume too much. Let’s get into it.

What Is CIP Incoterms?

CIP—short for Carriage and Insurance Paid To—is one of the official Incoterms rules published by the International Chamber of Commerce (ICC). It’s commonly used in international trade contracts when the seller agrees to handle both freight and insurance for a shipment, up to a specific named destination.

With CIP, it means the seller agrees to:

• Arrange and pay for the transport to a named destination (could be a port, warehouse, or buyer’s local depot).
• Purchase insurance to cover the goods for 110% of the invoice value, using Institute Cargo Clauses A (aka all risk insurance coverage).

But here’s the kicker—risk transfers to the buyer as soon as the goods are handed off to the first carrier, not when they arrive.

Let that sink in.

Even though the seller pays for both freight and insurance, the buyer’s risk starts almost immediately. The seller could be paying for coverage that the buyer doesn’t even know how to use—or that doesn’t cover the actual type of risk the buyer cares about. That’s why CIP is one of the most misunderstood and misapplied shipping terms in international trade.

For example, let’s say a US-based buyer sources parts from Germany under CIP terms. The German seller books the shipment via truck → rail → air. On the rail leg, a container is damaged due to poor handling. The buyer is now responsible for dealing with the cargo insurance claim—despite not booking the carrier, choosing the insurer, or having direct contact with either.

Need a reference for all your Incoterms? Here’s every Incoterms a vessel agent needs to know.

Who’s Actually Responsible for What in a CIP Shipment?

Let’s break it down to look at who is responsible for what during a CIP shipment on a detailed level:

Seller’s Responsibilities:

• Arrange transport to the agreed upon location (e.g. port, airport, final inland terminal).
• Pay freight costs all the way to the named destination.
• Insure goods under CIP carriage and insurance paid to rules with extensive insurance cover (110% of invoice value under ICC Clause A).
• Handle customs clearance for export.
• Deliver the goods to the first carrier—that’s when risk transfers.
• Provide commercial documents (invoice, transport doc, insurance certificate, etc.)

Once the goods hit the first carrier, the seller is done with risk. They’ve paid their dues, filed their docs, and handed off responsibility.

Buyer’s Responsibilities:

From the moment the goods hit the first carrier, the buyer takes the fall. That includes customs, taxes, and every inch from the drop-off to final delivery.

They also own the shipment once it’s unloaded—every mile to their warehouse is their responsibility.

If anything goes wrong in transit, it’s the buyer dealing with the insurer—not the seller. And if the insurance doesn’t cover specific risk scenarios? The buyer’s stuck unless they’ve lined up additional protection.

When Should You Use CIP? (And When You Shouldn’t)

CIP sounds great on paper—seller pays, insurance included, risk handed off. But that combo doesn’t work for every shipment or every team.

If you’re trying to decide whether CIP fits the shipment you’re quoting (or untangling one that already left the warehouse), here’s a quick reality check to know if you’re in the right ballpark.

Use CIP When:

• The seller is experienced with international transport and insurance.
• The shipment involves multiple modes (truck → rail → sea → air).
• The buyer wants the seller to handle logistics, but understands their risk starts early.
• The destination is far from the seller’s factory, and freight routes are already established.

Avoid CIP If:

• The buyer doesn’t understand Incoterms and assumes the seller’s insurance covers everything.
• There’s complex customs clearance or last-mile delivery that’s unclear.
• There’s high sensitivity to temperature, breakage, or timing, and the buyer hasn’t reviewed the insurance certificate.

Like most Incoterms, CIP shines in specific scenarios and creates headaches in others.

CIP vs. Similar Incoterms

Let’s be real—most of the confusion around CIP comes from it sounding like CPT, CIF, FOB, or FCA. So here’s how CIP actually compares to the others, from the lens of who pays, who insures, and who carries the risk.

5 Best Practices for Managing CIP Incoterms

If you’re working with CIP, your job isn’t just making sure the goods move—it’s making sure everyone involved knows exactly when the handoff happens, what’s covered (and what’s not), and who’s liable when things don’t go to plan.

Here are some proven best practices we recommend when managing CIP Incoterms:

1. Flag the First Carrier as the Risk Transfer Point

This is the biggest gotcha with CIP. Just because the seller pays for freight and insurance doesn’t mean they hold the risk until delivery. Risk transfers at the first carrier, so note that handoff clearly in your documents, system, and conversations with clients.

2. Review the Insurance Policy—Don’t Assume It’s Enough

CIP requires Clause A (all-risk) insurance, but that doesn’t mean everything is covered. If the goods are temperature-sensitive, high-value, or have special handling needs, make sure to:

• Ask for a copy of the insurance certificate
• Confirm the invoice value matches the declared value
• Recommend additional insurance if there are coverage gaps

3. Match the Named Place to the Contract Terms

A lot of confusion stems from poorly defined destinations. The named destination should be specific and match both the quote and the commercial contract. Don’t just say “port” or “warehouse”—specify exactly where the seller’s responsibility ends and where the buyer takes over.

4. Attach Documentation at Every Stage

Attach the insurance certificate, commercial invoice, transport document, and customs paperwork directly to the job or project record. When disputes happen, having it all in one place—especially inside a system like Base—saves hours and protects your margins.

5. Educate Buyers on Their Role

Don’t assume the buyer understands that they hold the risk during transit, even if the seller bears the initial freight and insurance costs. A quick onboarding doc or note in the proposal goes a long way in setting expectations—especially when something goes wrong.

CIP works well when the rules are followed and clearly documented. But if you’re not tracking the risk handoff, confirming what’s actually insured, or aligning your contract with reality, you’re gambling with someone else’s cargo—and your reputation.

Conclusion on CIP Incoterms

CIP Incoterms are often mistaken as a fully seller-covered deal—but that’s only half the truth. Yes, the seller pays for carriage and insurance, but the buyer is carrying the risk from the moment the goods hit the first carrier. If you’re the one handling the shipment, tracking terms, or chasing down liability mid-transit, understanding this nuance isn’t optional—it’s critical.

And that’s exactly where Base can help.

When you’re managing a CIP shipment in Base, you’re not juggling this in a spreadsheet or chasing emails to confirm who’s supposed to do what. You can:

• Assign contracts directly to the project
• Upload insurance certificates and confirm coverage levels
• Tag the first carrier and flag that as the risk transfer point
• Track freight costs billed to the seller
• Set up a milestone for when responsibility shifts to the buyer
• Attach customs docs for import duties and final delivery workflows

Base was built for the kind of international coordination that CIP requires. When each leg of the journey comes with different obligations, documents, and stakeholders, Base keeps it all connected—so no one’s guessing who’s on the hook when something goes sideways.

Want to see how that plays out in your next shipment? Let’s talk.

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