CIF (Cost, Insurance and Freight) is an Incoterm where the seller pays for the cost of goods, shipping, and insurance up to the destination port. However, the risk still transfers to the buyer once the goods are loaded onto the vessel.
How It Works:
- The seller prepares and exports the goods.
- The seller arranges shipping to the destination port.
- The seller also purchases insurance for the shipment.
- Once the goods are loaded onto the ship, the risk transfers to the buyer.
- The buyer handles customs clearance and inland transport.
Benefits:
- Provides insurance protection during transit.
- Simplifies logistics for the buyer.
- Widely accepted in global trade contracts.
- Ensures minimum coverage for the shipment.
Example:
A manufacturer exports machinery from India to Germany under CIF terms. The seller pays for freight and insurance until the goods reach the German port.