What Is CIF (Cost, Insurance and Freight)?
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Talk to our experts- CIF (Cost, Insurance and Freight)
- CIF (Cost, Insurance and Freight) is the Incoterms rule for sea and inland waterway transport under which the seller delivers the goods on board the vessel at the port of shipment, cleared for export, and pays the carriage and minimum cargo insurance to the named port of destination. Risk passes to the buyer once the goods are on board.
Also called: Cost, Insurance and Freight
How it works
Cost, Insurance and Freight (CIF) is one of the four Incoterms 2020 rules from the International Chamber of Commerce (ICC) for sea and inland waterway transport, written as CIF followed by the named port of destination. The ICC says CIF is reserved for use in maritime trade and is often used in commodity trading.
Who does what under CIF:
- Delivery and risk: the seller delivers once the goods are loaded on board the vessel at the port of shipment, and risk passes to the buyer at that moment.
- Carriage: the seller arranges and pays for the port-to-port carriage up to the port of destination.
- Insurance: the seller must take out cargo insurance with at least the minimum cover of the Institute Cargo Clauses (C). The ICC says the parties can agree to a higher level of cover.
- Customs and tariffs: ICC's tariff guidance lists export clearance as the seller's under CIF, and import clearance and tariffs as the buyer's.
Cost and risk pass at different points. Dutch government guidance on business.gov.nl, published by the Netherlands Chamber of Commerce (KVK), notes that under CIF the transfer of costs (port of arrival) and risk (port of departure) takes place at different times. ICC Academy calls the C rules shipment terms, not delivery terms: risk passes before the main leg of transport, so the buyer, not the seller who paid for that leg, bears the risk that the goods may not arrive in sound condition.
CIF vs CIP and FOB
- CIF vs CIP: CIP (Carriage and Insurance Paid To) works for any mode of transport, and the Incoterms page covers its higher insurance requirement. ICC Academy notes that under CIP risk passes when the goods are handed to the first carrier, and says CIP is the appropriate rule for goods in containers or on pallets moving by more than one mode, and CIF for bulk cargo moving port to port.
- CIF vs FOB: both are sea and inland waterway rules with delivery on board the vessel at the port of shipment. Under FOB, the buyer bears the transport costs and risk from that moment; under CIF, the seller also pays the main carriage and the insurance.
CIF and US customs value
For goods imported into the US, US Customs and Border Protection (CBP) says duty is not assessed on CIF charges, and that the CIF price, the price paid for the goods including freight and insurance, is not the value to declare for CBP purposes. Under 19 U.S.C. 1401a, the price actually paid or payable is the buyer's total payment for imported merchandise, exclusive of costs for transportation, insurance and related services incident to the international shipment from the country of exportation to the place of importation in the United States. This is general information, not customs advice.
Example
A US distributor buys 500 bags of a bulk product at $20 a bag, CIF Port of Houston: 500 x $20 = $10,000. The supplier's invoice shows $1,200 of ocean freight and $50 of insurance inside that price.
- Risk passed to the distributor when the bags were loaded on board at the port of shipment.
- Excluding the international freight and insurance gives $10,000 minus $1,200 minus $50 = $8,750, before any additions the statute requires.
On Shopify
As of October 28, 2026, Shopify's help center says most countries and regions include shipping, handling and insurance (CIF) when they determine whether a shipment is above duties and import tax thresholds, while others exclude these costs (FOB). It names the United States, New Zealand and South Africa as the most notable ones that don't include them. For stores that collect duties and import taxes at checkout, Shopify also says every international order requires a commercial invoice, and that the Harmonized System (HS) code and country or region of origin should be the same on the invoice and on the order in your Shopify admin.
How Uncap helps
Uncap's guide to the anatomy of a private order portal covers selling to distributors abroad: Shopify Markets allows catalog management with market-specific pricing, currency and product availability from a single Shopify backend, so a German distributor and a US distributor log in to the same portal but see market-specific pricing and currency automatically.
Sources
Frequently asked questions
What does CIF freight mean?
CIF means Cost, Insurance and Freight, a sea and inland waterway Incoterms rule. The seller pays the carriage and minimum cargo insurance to the named port of destination, while risk passes to the buyer once the goods are loaded on board at the port of shipment.
Who pays freight on CIF?
The seller pays the main sea freight to the named port of destination under Cost, Insurance and Freight. The buyer handles import clearance and pays tariffs at destination, per ICC guidance on tariffs.
What does FOB and CIF mean?
FOB (Free on Board) and CIF (Cost, Insurance and Freight) are both Incoterms rules for sea and inland waterway transport with delivery on board the vessel at the port of shipment. Under FOB the buyer pays the main carriage; under CIF the seller pays it and buys minimum insurance for the buyer.
Which is better, CIF or DDP?
They suit different trades. CIF is a sea and inland waterway rule where risk passes at loading and the buyer clears import. DDP works for any mode, and the seller carries the risk to the destination and pays import duties and taxes, the only Incoterms rule where it does.
