CPT vs CIP: Incoterms 2020 Compared
CPT vs CIP under Incoterms 2020: who pays carriage, why CIP needs ICC (A) all-risks cover at 110%, and where risk passes to the buyer.
Quick Answer: CPT vs CIP
How CPT and CIP work
Both rules suit any transport mode, including air, road, rail and multimodal container moves. The seller clears export, books and pays the main carriage to the named place, and delivers by handing the goods to the first carrier. From that moment the buyer carries the transit risk, even though the seller has paid the freight. This is the same risk-freight gap as CFR and CIF, but for any mode.
Why CIP insurance changed in 2020
Incoterms® 2010 required only ICC (C) cover under CIP. Incoterms® 2020 raised the minimum to ICC (A) all-risks for CIP, while CIF stayed at ICC (C). The parties can still agree a lower level, but they must say so in the contract. Under a letter of credit, UCP 600 Article 28(f)(ii) also asks for at least 110% of the CIF or CIP value when the credit is silent.
When to choose each rule
Choose CIP for high-value manufactured goods, pharmaceuticals and electronics, or when the buyer's bank wants the seller to present an insurance document. Choose CPT when the buyer already holds an annual cargo policy, or wants to buy cover locally because its country requires import insurance to be placed with a domestic insurer.
At a glance
| Point | CPT | CIP |
|---|---|---|
| Transport mode | Any | Any |
| Seller pays main carriage | Yes | Yes |
| Risk passes | Handover to first carrier | Handover to first carrier |
| Seller must insure | No | Yes, ICC (A), 110% |
| Export clearance | Seller | Seller |
| Import clearance and duty | Buyer | Buyer |
Worked example
A seller ships machinery worth USD 80,000 by air from Frankfurt to Mumbai. Under CPT Mumbai Airport the seller pays the air freight of USD 4,200 and the price is USD 84,200. Under CIP it also buys ICC (A) cover on 110% of USD 84,200, so insured value is USD 92,620; at an indicative premium of 0.15% that adds about USD 139, making the CIP price about USD 84,339.
Frequently asked questions
Does CIP require all-risks insurance?
Yes. Under Incoterms 2020 CIP the seller must buy cover at least equal to Institute Cargo Clauses (A), for at least 110% of the contract price, unless the parties agree otherwise.
Where does risk pass under CPT and CIP?
Risk passes when the seller hands the goods to the first carrier at the place of shipment, not at the destination named in the rule.
Can CPT and CIP be used for sea freight?
Yes. Both suit any mode, and they are better than CFR and CIF for containers because delivery happens at the carrier's terminal, not on board the vessel.
Frequently asked questions
Does CIP require all-risks insurance?#
Yes. Under Incoterms 2020 CIP the seller must buy cover at least equal to Institute Cargo Clauses (A), for at least 110% of the contract price, unless the parties agree otherwise.
Where does risk pass under CPT and CIP?#
Risk passes when the seller hands the goods to the first carrier at the place of shipment, not at the destination named in the rule.
Can CPT and CIP be used for sea freight?#
Yes. Both suit any mode, and they are better than CFR and CIF for containers because delivery happens at the carrier's terminal, not on board the vessel.