CIF
CIF (Cost, Insurance and Freight) is one of the maritime-only Incoterms. Under CIF, the seller arranges and pays for: the cost of the goods, ocean freight to the destination port, and marine cargo insurance covering the buyer. However, risk transfers to the buyer when goods cross the ship's rail at the load port — not at destination.
This split between cost responsibility (extends to destination) and risk transfer (at origin) catches many traders out. If goods are lost at sea, the buyer claims on the insurance policy the seller arranged. CIF is one of the most common Incoterms in container trade.
CIF's split between cost (which runs to destination) and risk (which passes back at origin) is the single most misunderstood point in Incoterms. Buyers routinely assume they are covered all the way to the door and are not — if goods are lost at sea, it is the buyer who claims on the policy, even though the seller bought it.
(on board)
insurance + freight to here
Under CIF Rotterdam, the seller pays the ocean freight and buys marine insurance to Rotterdam. But if the container is lost mid-ocean, the buyer claims on that insurance — because risk passed to the buyer at the load port, not at Rotterdam.
Does CIF cover the buyer's risk to destination?
No. The seller pays cost, insurance and freight to the destination port, but risk transfers to the buyer at the origin port. The insurance the seller buys protects the buyer, who is the one at risk in transit.
What is the difference between CIF and CFR?
Both have the seller pay cost and freight to destination with risk passing at origin. Under CIF the seller also buys insurance; under CFR the buyer arranges their own.