CIF plus 10%
The customary basis of valuation: cost, insurance, freight and a tenth on top.
Definition
The conventional cargo valuation — invoice cost, plus insurance, plus freight, plus 10%. The uplift is an allowance for the costs a loss creates beyond the goods themselves: the buyer's lost margin, the expense of surveying and disposing of the damage, and the incidental charges of replacing the shipment. Incoterms 2020 requires a seller insuring under CIF or CIP to cover at least 110% of the contract value, and UCP 600 Article 28 requires an insurance document presented under a letter of credit to show at least 110% of the CIF or CIP value where the credit is silent.
Why it decides money
The 110% figure is not a convention somebody invented; it is written into both the Incoterms rules and the letter-of-credit rules, and a document showing less is a discrepancy.
Related terms
- Sum insured
- The agreed figure the cover is written for, and the ceiling on any payment.
- UCP 600
- The letter-of-credit rules, including what an insurance document must show.
- Incoterms
- The ICC rules that set where risk passes and who, if anyone, must insure.
More in value and premium
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