Meaning
CIF stands for Cost, Insurance and Freight. It is an Incoterms® rule reserved for sea or inland waterway transport. The seller contracts for carriage to the named destination port and obtains the insurance coverage required by the rule.
Risk and cost are different questions
The destination named after CIF describes the port to which carriage is arranged, but it should not be assumed to be the point where risk transfers. Delivery and risk transfer occur according to the rule at shipment. This distinction is central to understanding CIF.
Insurance scope
The rule specifies a minimum insurance obligation, but the parties may need broader coverage for the goods, route, or commercial risk. The insurance contract and policy wording should be checked directly rather than inferred from the three-letter term.
Contract checklist
- Name the destination port and Incoterms edition precisely.
- Confirm whether the required insurance is commercially adequate.
- Align transport and insurance documents with payment requirements.
- Ensure both parties understand the delivery and risk-transfer point.