CIP Incoterms: Cost, Risk, and the Insurance Requirement

What CIP adds to CPT

CIP — Carriage and Insurance Paid To — is one of the seven Incoterms 2020 rules that apply to all modes of transport, including road groupage. It extends CPT by adding a mandatory insurance obligation: the seller pays freight to the named destination and takes out a transport insurance policy covering the main haul.

The critical structure, which CIP shares with CPT, is the separation between cost and risk. Costs travel with the seller to the destination; risk transfers to the buyer at origin, the moment the goods reach the first carrier. What CIP adds is a policy to cover that buyer-side risk — arranged and paid for by the seller.

The cost-risk split

Under CIP, the seller’s cost obligations run from the point of departure to the named destination: export clearance fees and inspections, loading at origin, the main international freight, and the insurance premium. Where the freight contract includes terminal handling at destination, those costs also fall to the seller because they are built into the agreed freight.

The risk transfers at origin, when the goods are placed in the first carrier’s custody in a manner appropriate for the mode of transport. For road groupage — where a consignment shares a trailer with other shippers’ cargo — that is typically the seller’s loading ramp or a cargo-freight station. From that moment, transit risk is the buyer’s, regardless of how far the seller has contracted the freight.

The practical consequence is worth stating precisely. If goods arrive in Türkiye damaged, the economic loss is the buyer’s. The buyer’s recourse is against the insurance policy that the seller has arranged — not against the seller directly. On the Italy–Türkiye corridor, the busiest lane in our network at 85.3 % of measured volume and a recorded average of 6.3 days in transit, the goods spend that time at the buyer’s risk inside a trailer the seller has contracted.

The 2020 insurance upgrade

Incoterms 2020 raised the required insurance level for CIP. Under the 2010 edition, the minimum was Institute Cargo Clauses (C) — named-perils cover, limited to fire, sinking and collision-class events. Under the 2020 edition, the minimum for CIP is Institute Cargo Clauses (A): all-risks cover, meaning the insurer covers any physical loss or damage not specifically excluded.

The parallel sea-only clause CIF was not changed. CIF remains at ICC (C). For any road or multimodal shipment — which is to say, for every consignment moving between Europe and Türkiye by truck — CIP is the applicable clause, and the upgraded standard applies.

The insured amount must be at least the contract price. Insuring at 110 % of invoice value is standard market practice, to include the buyer’s anticipated profit; Incoterms 2020 does not mandate the uplift, but the gap is real when it is absent. The buyer may arrange additional cover at their own cost if the seller’s policy does not extend far enough — for instance, if warehouse-to-warehouse cover is needed rather than main-haul cover alone.

Carrier liability and cargo insurance are different things

The CMR Convention caps carrier liability at 8.33 special drawing rights per kilogram of gross weight for international road haulage. That is a limit on what a carrier pays if found liable — it is not compensation calculated from the commercial value of the goods. For light, high-value consignments — electronics, instruments, precision parts — the CMR ceiling can fall far short of the invoice.

This is precisely the gap that the ICC (A) policy under CIP is designed to address. The carrier’s CMR liability and the cargo insurance policy are two separate instruments operating on different bases: one from the weight of the goods, the other from their declared value. A shipment moving under CIP carries both; a shipment moving under CPT carries only the CMR liability, with no mandatory cargo policy.

Our cargo insurance service addresses the remaining gap — both where the seller’s CIP policy does not reach and where the buyer wants a supplementary layer for warehouse-to-warehouse or pre-shipment cover.

Who clears what

The seller handles all export formalities in the country of departure: export licences, security declarations and any pre-shipment inspection required. These obligations are complete before the goods move.

The buyer handles all import formalities at the Turkish side. This includes the gümrük beyannamesi — the Turkish customs declaration — together with all applicable duties, taxes and product-specific control certificates required on entry. The seller has no obligation to obtain Turkish import documents or pay Turkish import duties. On transactions where the seller intends to take on Turkish customs duties, the applicable clause is DDP, not CIP; the two are frequently confused, and the practical difference at the Turkish border is significant.

Across the corridors we operate, goods moving from EU member states carry an A.TR movement certificate that establishes their free-circulation status and reduces the duty burden at the Turkish point of entry. That document is the seller’s to obtain and accompany with the shipment, because export customs preparation falls within the seller’s obligation under CIP.

Name the destination precisely

CIP requires a named place of destination, and imprecision creates cost disputes that are not resolved by the clause itself. ‘CIP Istanbul’ leaves open whether the seller’s freight obligation runs to a port terminal, a customs clearance depot, or the buyer’s warehouse address. Each of those points is a different distance, a different cost, and a potentially different endpoint for the seller’s insurance policy.

The insurer’s coverage under the seller’s CIP policy typically runs to the place named in the contract. If the buyer’s delivery address lies beyond that named point, the leg from the Turkish terminal to the final address is outside the mandatory cover and must be arranged separately. In groupage traffic, where a consignment is consolidated with others and may be linehaul-delivered to a regional hub before final delivery, the named place should reflect where the seller’s contracted haul genuinely ends.

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The information on this page describes Incoterms 2020 as published by the International Chamber of Commerce and reflects standard practice on European–Türkiye road groupage lanes. The application of any clause depends on the terms of the individual contract, the nature of the goods and the specific route. Our methodology sets out how transit documents and customs preparation are handled; binding guidance on a particular shipment requires review of that shipment’s specific circumstances.