In plain English
The seller pays the ocean freight to the destination port and buys insurance, but risk still passes to the buyer once the goods are on board at origin. The insurance is there to cover the buyer’s risk during the voyage.
Under Incoterms 2020 the required cover for CIF is the minimum level (Institute Cargo Clauses C). A buyer who wants wider cover should ask for it in the contract or buy extra cover.
Why it matters when you ship
CIF is common in commodity trades and in letters of credit. The buyer gets an insured shipment without arranging it, but should check that the minimum cover is enough for the goods.
Example
A seller quotes “CIF Los Angeles” for a container of furniture. The price includes ocean freight and a minimum insurance policy for the buyer. If the container is lost at sea, the buyer claims on that policy.
Related terms
CIF (Cost, Insurance and Freight): common questions
What is the difference between CIF and CIP?
CIF is only for sea and inland waterway freight and requires minimum cover. CIP works for any mode of transport and, under Incoterms 2020, requires wider all-risks cover.
Cite this page
Cite as: Transportli, “CIF: Cost, Insurance and Freight Meaning”, https://transportli.com/glossary/cif/, updated November 11, 2026.
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