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Cost, Insurance and Freight must also indicate the port of destination,
e.g., CIF Shanghai. When a price is quoted CIF by the supplier or
manufacturer, it means that the selling price includes the cost of the goods,
the freight or transport costs and also the cost of marine insurance. As
mentioned earlier, CIF is an international commerce term (Incoterm).
CIF is identical in most particulars with Cost and Freight (CFR), and the
same comments apply, including its applicability only to conventional maritime
transport. Risk of loss of, or damage to, the goods is for the buyer, just
as with CFR. However, in addition to the CFR responsibilities, the seller
under CIF must obtain in transferable form a marine insurance policy to
cover the buyer's risks of transit with insurers of repute. The policy must
cover the CIF price plus ten percent and where possible be in the currency
of the contract. Note that only very basic cover is required equivalent
to the Institute "C" clauses, and buyers should normally insist on an "all-risk"
type of policy such as that under the Institute "A" clauses. The seller's
responsibility for the goods ends when the goods have been delivered on
board the shipping vessel. In the guidelines for CIF published in Incoterms
2000 the term "carrier" does not appear and it clearly states "the seller
must deliver the goods on board the vessel at the port of shipment" which
makes CIF the incorrect term to use where the seller wishes their responsibility
to end when they deliver the goods into the hands of a carrier prior to
the goods passing the ship's rail at the port of loading. In the great majority
of transactions the more correct term is CIP. This term is only appropriate
for conventional maritime transport, not ro/ro or international container
movements.
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