Carriage and Insurance Paid to(Cost and insurance paid before) means that the seller transfersproductto the carrier or another person nominated by the seller at an agreed place (if such a place is agreed by the parties) and that the seller is obliged to conclude a contract of carriage and bear the transportation costs necessary to deliver the goods to the agreed destination.
The seller must conclude an insurance contract with minimal coverage covering the risk of loss or damage to the goods during transportation. If the buyer wishes to have more protection through insurance, he must either clearly agree this with the seller or carry out additional insurance at his own expense.
When using CIP terms, the seller fulfills his delivery obligation when he delivers the goods to the carrier, and not when the goods have reached their destination.
This term contains two critical points, since risk and costs are transferred in two different places. The parties are recommended to determine as accurately as possible in the contract the place of delivery of the goods in which the risk passes to the buyer, as well as the named destination to which the seller is obliged to conclude a contract of carriage.
When using several carriers to transport goods in an agreed direction and if the parties have not agreed on a specific delivery point, the disadvantage is that the risk passes when the goods are transferred to the first carrier at a point whose choice completely depends on the seller and which is beyond the buyer's control. Hin order for the transfer of risk to be carried out at a later stage (i.e. at the seaport or at the airport), this must be defined in the contract.
The parties are also advised to identify the point at the agreed destination as accurately as possible, since the costs up to this point are borne by the seller. It is recommended that the seller provide contracts of carriage that accurately reflect this choice. If the seller under his contract of carriage bears the costs of unloading at the agreed destination, the seller has no right to demand from the buyer compensation for such costs, unless otherwise agreed by the parties.
The CIP conditions require the seller to perform customs formalities for export, if applicable. However, the seller is not obliged to perform customs formalities for importation, pay import duties or perform other customs formalities upon importation.
For the importer, CIP is convenient because the exporter takes care of the organizational aspects with the delivery of the goods and its insurance. But all these costs, the seller will still include in the price of the goods.
This list is not complete and depends on the specific case, under these conditions of delivery, the seller's logistics may give a lower freight cost compared to, for example,FOB, but it may happen that in the end, due to the fact that the buyer pays various port fees at the port of arrival and this increases the total cost, it is also not recommended to use this term ifcargoit is planned to ship further across Russia in container trains.