Cost Insurance and Freight (CIF)

Posted in Operations and Supply Chain Terms, Total Reads: 411

Definition: Cost Insurance and Freight (CIF)

CIF or Cost, Insurance and Freight is an INCO term that mandates the seller to ensure the delivery of carriage of goods by the sea or to a destination port.

INCO Terms:

• To have uniform business terminology throughout the industry INCO terms were introduced by the International Chamber of Commerce created "INCOTERMS" in 1936.

• The latest revision of the INCO terms was in 2010 and was the eight revision

• They were created primarily for the use in global trade

• Every INCO term is a purchase agreement to buy and sell a particular product internationally

• It also deals with the documents required for global trade, clarifying which documents are responsibility of which party

-  Costs

- Control

- Liability

There are 4 categories under the Inco terms, namely:

• E terms: This is a minimum obligation for the seller as it has to only make the goods available at its own premises for the buyer to collect them.

• F terms: The seller delivers the goods to a carrier which has been appointed by the buyer. The seller will arrange and pay for delivery of goods to the carrier, but the buyer pays for everything after that.

• C terms: The seller has to contract for carriage, but does not undertake the risk of loss or damage after the shipment.

• D terms: The seller bears all risk involved in bringing the goods to the buyer.


Our INCO term under consideration, i.e. CIF, lie under the C terms. According to this trade regulation, it is expected by the seller to provide the documents necessary to obtain the goods from the carrier.

It officially dictates that the loading and facilitating of transit of goods between the source and destination port should be done by the seller. The seller is responsible for delivering the goods on the vessel or procuring the already delivered goods. As soon as the goods are loaded onto the vessel, the risks involved with the damage of goods are passed on the buyer. The responsibility of paying up costs and freights of goods are borne by the seller itself. The responsibility of insurance and protection against the risk of damage or loss during the transit.


Hence, this concludes the definition of Cost Insurance and Freight (CIF) along with its overview.


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