Which Incoterms rules require insurance?

Only CIF and CIP. Under Incoterms 2020 the seller must insure for at least 110% of the contract value in the contract currency: Institute Cargo Clauses (C) as a minimum under CIF, and Institute Cargo Clauses (A) as a minimum under CIP. Under the other nine rules no party is obliged to insure.

What changed between Incoterms 2010 and 2020 for insurance?

CIP was raised from a minimum of Institute Cargo Clauses (C) to Clauses (A). CIF was deliberately left at (C), because it is used on commodity trades where cargo is sold on in transit and a minimum standard keeps the documents interchangeable.

Does CIF mean my goods are fully insured?

No. CIF sets a floor, and the floor is Clauses (C) — the narrowest standard cover there is. It does not respond to theft, non-delivery, ordinary handling damage, or fresh and rain water. If you want more, say so in the sale contract; the rule does not stop the parties agreeing a higher level.

Who should insure under FOB or CFR?

The buyer, because the buyer carries the risk from the moment the goods are on board. Neither rule obliges anybody to insure, and the fact that the seller pays the freight under CFR does not make the seller responsible for the cover.

Incoterms 2020: who has to insure, and who just assumes

Two of the eleven rules oblige somebody to buy cargo insurance. Under the other nine the obligation belongs to nobody, and that is where uninsured legs come from — each side assuming the other arranged it.

11 rules2 require insuranceIncoterms® 2020

The two that require cover

Both require at least 110% of the contract value, in the currency of the contract. The difference between them is the clause level, and it is the change Incoterms 2020 made.

CIP — Carriage and Insurance Paid To ICC (A)

At least 110% of the contract value, in the currency of the contract

CIF — Cost, Insurance and Freight ICC (C)

At least 110% of the contract value, in the currency of the contract

The nine that require none

Nothing in these rules makes anybody insure. Whoever carries the risk over a leg should arrange cover for it, and the column below says who that is.

EXW Ex Works — At the seller's premises or another named place, once the goods are placed at the buyer's disposal — before loading.
FCA Free Carrier — When the goods are delivered to the carrier nominated by the buyer at the named place — loaded, if the named place is the seller's premises; ready for unloading otherwise.
CPT Carriage Paid To — When the goods are handed to the first carrier — at origin, long before the named destination.
DAP Delivered at Place — At the named destination, with the goods on the arriving conveyance ready for unloading.
DPU Delivered at Place Unloaded — At the named destination, once the goods are unloaded from the arriving conveyance.
DDP Delivered Duty Paid — At the named destination, ready for unloading, cleared for import.
FAS Free Alongside Ship — When the goods are placed alongside the ship at the named port of shipment.
FOB Free on Board — When the goods are on board the ship at the named port of shipment.
CFR Cost and Freight — When the goods are on board at the port of shipment.

All eleven rules

Rule	Applies to	Risk passes	Insurance obligation
EXW Ex Works	Any mode	At the seller's premises or another named place, once the goods are placed at the buyer's disposal — before loading.	None
FCA Free Carrier	Any mode	When the goods are delivered to the carrier nominated by the buyer at the named place — loaded, if the named place is the seller's premises; ready for unloading otherwise.	None
CPT Carriage Paid To	Any mode	When the goods are handed to the first carrier — at origin, long before the named destination.	None
CIP Carriage and Insurance Paid To	Any mode	When the goods are handed to the first carrier, as with CPT.	Seller — ICC (A), 110%
DAP Delivered at Place	Any mode	At the named destination, with the goods on the arriving conveyance ready for unloading.	None
DPU Delivered at Place Unloaded	Any mode	At the named destination, once the goods are unloaded from the arriving conveyance.	None
DDP Delivered Duty Paid	Any mode	At the named destination, ready for unloading, cleared for import.	None
FAS Free Alongside Ship	Sea and inland waterway	When the goods are placed alongside the ship at the named port of shipment.	None
FOB Free on Board	Sea and inland waterway	When the goods are on board the ship at the named port of shipment.	None
CFR Cost and Freight	Sea and inland waterway	When the goods are on board at the port of shipment.	None
CIF Cost, Insurance and Freight	Sea and inland waterway	When the goods are on board at the port of shipment.	Seller — ICC (C), 110%

Common questions

Which Incoterms rules require insurance?: Only CIF and CIP. Under Incoterms 2020 the seller must insure for at least 110% of the contract value in the contract currency: Institute Cargo Clauses (C) as a minimum under CIF, and Institute Cargo Clauses (A) as a minimum under CIP. Under the other nine rules no party is obliged to insure.
What changed between Incoterms 2010 and 2020 for insurance?: CIP was raised from a minimum of Institute Cargo Clauses (C) to Clauses (A). CIF was deliberately left at (C), because it is used on commodity trades where cargo is sold on in transit and a minimum standard keeps the documents interchangeable.
Does CIF mean my goods are fully insured?: No. CIF sets a floor, and the floor is Clauses (C) — the narrowest standard cover there is. It does not respond to theft, non-delivery, ordinary handling damage, or fresh and rain water. If you want more, say so in the sale contract; the rule does not stop the parties agreeing a higher level.
Who should insure under FOB or CFR?: The buyer, because the buyer carries the risk from the moment the goods are on board. Neither rule obliges anybody to insure, and the fact that the seller pays the freight under CFR does not make the seller responsible for the cover.

Sources

Incoterms® is a registered trademark of the International Chamber of Commerce. The rules are an ICC publication; this page summarises the insurance consequences of each rule and does not reproduce the text.

This page summarises the instruments above. It is not the wording, and it is not legal advice. Where a summary conflicts with a convention text, a policy wording or a certificate, that document governs.

InsuranceScanner is an insurance intermediary, not an insurer — see the Terms for our role. Nothing here is a personal recommendation that a particular cover, sum insured or deductible is suitable for you. Where anything on this page conflicts with the certificate, policy schedule or wording issued by an insurer, that document governs.