Contract language between buyers and sellers can feel complex—but we’re here to clear some of it up, at least when it comes to your Incoterms®. These handy three-letter designations act as shorthand for who pays for what transportation costs when buying or selling goods. When you understand your Incoterms, you’ll be able to negotiate your contracts with confidence. (And you’ll be able to better calculate your real costs!) In this article, we’ll explain everything you need to know about the CIF Incoterm.
What Does CIF Mean?
CIF stands for Cost, Insurance, and Freight. Along with FAS, FOB, and CFR, it’s one of four Incoterms that applies only to goods that move via sea and inland waterway.
The CIF Incoterm is very similar to CFR, in that the seller pays for all the costs up to and including the ocean freight to a destination port of the buyer’s choosing.
However, in addition, the seller is also responsible for purchasing insurance protecting the buyer against loss of or damage to the goods during transit to the named port.
Once the vessel arrives at the port, the buyer pays for all the transportation costs to move the goods to the final destination.