Cost, Insurance and Freight
Cost, Insurance and Freight (CIF) is one of 13 international commerce terms known as Incoterms. Incoterms are commonly known trade terms first developed by the International Chamber of Commerce (ICC) in 1936 to govern the shipping policies and responsibilities of Buyers and Sellers, who engage in international trade. CIF contract regulates the delivery of the goods as paid expenses, insurance and freight. In other words, CIF means “sales made at the value of the property, provided that it is loaded on board to carry the goods at a specific location, and at a discounted price consisting of the insurance fee to be paid by the Seller and the freight.”
The sale takes place by leaving the Seller’s goods to the shipboard. In this term, the Seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The Seller also contracts for insurance cover against the Buyer’s risk of loss of or damage to the goods during the carriage. This term should only be used for sea or inland waterway transport.