——SOURCING GLOSSARY
CIF Incoterm (Cost, Insurance and Freight) — and its hidden catch
Under CIF, the seller pays the cost, the ocean freight, and insurance all the way to your destination port. Sounds buyer-friendly — and it mostly is.
But there’s a catch worth knowing before you sign: the risk is already yours the moment the goods are loaded at origin, even though the seller is the one paying for freight and insurance to the other end.
What "Cost, Insurance and Freight" actually splits
Item
Paid / arranged by
But…
Cost of goods
Seller
—
Main ocean freight
Seller
to destination port
Insurance
Seller
minimum cover only (see below)
Risk in transit
You (buyer)
from the moment of loading at origin
The CIF catch — insurance ≠ risk
Risk vs cost are split
The seller pays to get the goods to your port, but if the container is damaged or lost at sea, it's your loss to claim — the risk passed to you at origin.
The insurance is the bare minimum
CIF only obliges the seller to buy Institute Cargo Clauses (C) — basic cover that excludes a lot. For valuable or fragile goods, that minimum often won't make you whole. Many buyers prefer to control their own insurance (one reason to consider FOB or FCA instead).
FCA closes that gap: risk passes cleanly when the carrier takes the container at the terminal. That’s why the International Chamber of Commerce (ICC) advises using FCA, not FOB, for containerised cargo.
Frequently asked questions
Yes — but only the minimum level (Institute Cargo Clauses C). It’s basic cover, and it’s bought by the seller for your benefit.
You do, from the moment the goods are loaded at the origin port — even though the seller pays the freight and insurance to destination.
It depends. CIF is simpler (the seller arranges everything to your port), but you give up control of freight cost and insurance level. Buyers who want that control often choose FOB or FCA.
The right Incoterm can quietly cost or save you thousands. We make sure it saves.
From Incoterm selection to freight negotiation, we help you optimize your landed cost.