What Is CIF?

CIF is written next to the price with a named destination port, such as CIF Rotterdam. The ICC lists it among the eleven Incoterms 2020 rules. Under CIF the seller contracts and pays for carriage to the destination port and buys cargo insurance in the buyer's favour. The risk, however, passes to the buyer earlier, when the goods are on board at the port of shipment. That split between where the cost ends and where the risk ends is the point readers most often miss. The rule is meant for sea and inland waterway transport, so a forwarder can confirm if it suits containerised cargo.

For example, a Kochi spice exporter quotes USD 25,000 CIF Hamburg. The price covers the sea freight and insurance to Hamburg. If the cargo is damaged at sea, the buyer claims under the insurance the exporter arranged, because risk passed on loading at Kochi.

• Pricing: A CIF price is higher than an FOB price for the same goods because it includes sea freight and insurance. Compare quotes on the same term.
• Insurance: The seller buys the cover and the buyer is the beneficiary. The ICC rules set a minimum level of cover, so a buyer who wants more should say so in the contract.
• Bank compliance: Your AD bank may ask for the invoice and shipping documents when it matches receipts to an export under the FEMA export regulations. Showing the CIF term and port helps the bank read the invoice value.
• GST and income tax: CIF is a delivery convention. GST and income tax treatment depends on the law, so ask your adviser rather than rely on the term alone.

The seller books the sea carriage and the insurance, loads the goods, and passes the documents to the buyer, while the risk passes at loading.

1. The parties agree CIF and name the destination port in the contract, with the edition, for example Incoterms 2020.
2. The seller packs the goods and clears them for export.
3. The seller books the sea carriage to the destination port.
4. The seller buys cargo insurance naming the buyer as beneficiary.
5. The goods are loaded on board and the risk passes to the buyer.
6. The seller sends the invoice, insurance document and transport document to the buyer.

You add the sea freight and insurance cost to your goods price and write the total with CIF and the destination port. Get a freight and insurance quote first so the price holds.

1. Work out your goods price including packing and inland transport.
2. Get a written quote for sea freight to the destination port.
3. Get a quote for cargo insurance for the invoice value.
4. Add the figures and your margin to reach one price.
5. Write it as CIF plus the destination port, for example CIF Felixstowe, with the edition.
6. Show the same term on the proforma and commercial invoice.

CIF includes sea freight and insurance in the seller's price. FOB leaves both to the buyer. In both, risk passes when the goods are on board at the port of shipment.

• Risk: Under CIF the cost of carriage runs to the destination port, but the risk passes at loading. A loss at sea is the buyer's, claimed through the insurance.
• Air freight: CIF is for sea and inland waterway transport. Other rules apply to air or road shipments.
• Payment: CIF sets delivery, cost and risk. Payment timing is separate, see export payment terms.
• Import duty: CIF does not make the seller pay import duty at destination. The buyer handles import clearance.

• FOB: Buyer arranges and pays sea freight.
• EXW: Seller makes goods available at its own premises.
• DDP: Seller delivers goods cleared for import at the destination.
• Commercial invoice: The seller's bill for the goods, showing the trade term.
• Bill of lading: The carrier's document for goods shipped by sea.

Every rule and definition on this page is linked to its official source, checked on the dates below.

1. ICC, Incoterms rules, Eleven trade terms; Incoterms 2020 in force 1 January 2020 (checked 9 Oct 2026)
2. RBI, FEMA (Export and Import of Goods and Services) Regulations, 2026, FEMA 23(R)/2026-RB, Export monitoring and AD bank matching of receipts (checked 9 Oct 2026)