CFR — Cost and Freight
When the goods are on board at the port of shipment.
The insurance position
Nobody is obliged to insure under CFR. The rule allocates cost and risk, and stops there. Whoever bears the risk over a leg of the journey is the party with something to lose on it.
The buyer bears the sea leg while the seller pays for it. The sea-freight equivalent of CPT, and the same trap.
Where risk passes
When the goods are on board at the port of shipment.
Where cost passes
At the named port of destination — the seller pays the sea freight.
What a broker would tell you
Buyers on CFR must arrange cover attaching on loading at the port of shipment, and running to their own final destination rather than stopping at the discharge port.
The mistake that gets made
Reading the "C" as covering insurance. It covers cost. CIF is the one with insurance in the name.
Who is exposed
The buyer bears the sea leg while the seller pays for it. The sea-freight equivalent of CPT, and the same trap.
Where a seller has sold on terms that put the risk on the buyer and payment has not been received, seller's interest cover is the usual fallback — it responds when the buyer turns out not to have insured.
Seller's interest cover →Other rules for sea and inland waterway
Sources
Incoterms® is a registered trademark of the International Chamber of Commerce. This page summarises the insurance consequences of the rule; the ICC publication is the rule.
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.