CIF (Cost, Insurance, Freight) Contract
A “Cost, Insurance, Freight” (CIF) contract is a type of contract for the sale of goods in which the contract price includes the cost, insurance and freight to the nominated sale destination.
The term CIF was developed by the International Chamber of Commerce (ICC) and is one of what are known as “Incoterms”.
According to the ICC, a CIF means that a seller will deliver goods aboard a vessel and the risk of loss and damage to the goods will pass to the buyer when the goods are on board the vessel. The seller of the goods must contract for and pay the costs and freight necessary to bring the goods to the named destination. A seller will also contract for insurance cover against the buyer’s risk of loss and/or damage to the goods whilst on board a vessel. The type of insurance required by a seller need only be minimum cover. If a buyer wants insurance greater than the minimum amount that is required they will need to agree on the quantum with the seller and or make their own insurance arrangements.