What is the difference between CIP and CIF in Incoterms?

Both CIF and CIP include freight and insurance arranged by the seller, but they differ in two key ways:

CIF (Cost, Insurance and Freight):

• Used exclusively for sea and inland waterway transport
• Insurance minimum: Institute Cargo Clauses (C) — the narrowest cover (fire, explosion, vessel sinking, collision)
• Risk transfers to buyer when goods are loaded on the vessel at origin port

CIP (Carriage and Insurance Paid to):

• Used for any mode of transport including multimodal (sea + road, air + road)
• Insurance minimum: Institute Cargo Clauses (A) — the broadest cover (all-risks; much better protection)
• Risk transfers to buyer when goods are handed to the first carrier

Practical implication: CIP requires the seller to buy much more comprehensive insurance. If a seller offers CIP, you're getting better cargo protection as standard. Under CIF, you'd need to negotiate upgraded insurance separately.

For containerized door-to-door shipments, CIP is technically the correct term (since goods often move by truck to the port before ocean). Many traders still use CIF loosely for containerized cargo — always clarify what insurance cover is included.