Home insurance CIP Meaning: What is Carriage and Insurance Paid ?

CIP Meaning: What is Carriage and Insurance Paid ?

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CIP Meaning:  Carriage and Insurance Paid To (CIP) is a term that refers to the payment of carriage and insurance to a third party.

What is CIP( Carriage and Insurance Paid )

cip meaning

When a seller pays freight and insurance to transport items to a seller-appointed party at an agreed-upon location, this is known as Carriage and Insurance Paid To (CIP).

As soon as the products are delivered to the carrier or designated person, the risk of damage or loss to the items is transferred from the seller to the customer.

It’s similar to Cost, Insurance, and Freight, but it’s not the same (CIF).The seller must insure items in transit for 110 percent of the contract value under CIP.

If the buyer wishes to purchase additional insurance, he or she must arrange for it.

Carriage and Insurance Paid To (CIP) is one of 11 Incoterms, a set of universally recognised commercial trade terms issued by the International Chamber of Commerce most recently in 2010.

Keypoints:

• Carriage and insurance are included in the price. When a seller pays freight and insurance to deliver items to a seller-designated party at a mutually agreed-upon location, this is referred to as to.

• The seller must insure items in transit for 110 percent of the contract value under CIP.

• CIP is one of 11 Incoterms, a set of internationally recognised business terminology.

How Does CIP (Carrying and Insurance Paid To) Work?

CIP (Carrying and Insurance Paid To) is a term that is commonly used in association with a destination.

CIP New York, for example, denotes that the seller is responsible for all freight and insurance costs in New York.

Carriage or freight charges with CIP refer to transportation charges for any accepted means of transport, such as road, rail, sea, inland canal, air, or multimodal transport that involves a combination thereof, just as they do with “Carriage Paid To” (CPT).

Consider the following hypothetical scenario: LG wishes to send a container of tablet computers from South Korea to Best Buy in the United States.

LG is responsible for all freight charges and minimum insurance coverage for delivering the tablet computers to the carrier or designated person for Best Buy at a predetermined location under the CIP.

LG’s (the seller) obligation ends once the shipment is delivered to the carrier or Best Buy’s designated person, and Best Buy (the buyer) bears full risk and responsibility for the shipment.

CIP Provides Additional Coverage

Because the seller is only required to purchase the bare minimum of insurance coverage to convey the shipment to its destination, the buyer should consider arranging supplemental coverage that covers all risks.

Otherwise, the buyer may be responsible for significant damages if the cargo is damaged or lost due to an unforeseen event that is not covered by the seller’s modest insurance coverage.

The buyer can also request that the seller provide additional insurance coverage and, based on the buyer and seller’s relative bargaining positions, can negotiate for the seller to cover part or all of the cost of such additional insurance.

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