CIF is short form of “Cost, Insurance and Freight”. Like the CFR this incoterm is also exclusively used for shipping. Also like the CFR CIF is used for bulk goods and non containerised shipments.
This indicates that the seller is responsible for the cost as well as the freight of the goods to the destination port which is decided by the buyer. In addition to all of this the seller must also provide insurance for the goods being transported. In CIF the risk transfer point is also different from other incoterms. The risk transfer point is not the same cost transfer point as is the case with other incoterms. Under CIF the risk is transferred when the goods get loaded on the ship at the origin of the shipment.
The seller is obliged to give insurance to the goods and deliver the shipment and the documents required. He or she must also take care of the packaging and the wrapping. Inland transportation and customs clearance at the country of origin is also handled by the seller. Also the seller pays for the international freight.
The buyer is relaxed from covering the insurance of the goods under CIF but has to pay for the goods. The buyer is also obliged to pay arrival expenditures and customs clearance. The buyer’s obligations also include inland transportation at the destination country and payment of fees.
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