On the operations desk, CIP tells a freight forwarder that the seller books and funds the main carriage all the way to the named place and also arranges cargo insurance for the journey, yet the buyer carries the risk of loss or damage from the moment the goods reach the first carrier at origin, so the cost line and the risk line sit in different places. The decision the term drives is who books and pays carriage to destination and who relies on the seller-bought cover, since the policy is taken out for the buyer's benefit while the goods travel at the buyer's risk. The clean line to draw is against CPT (Carriage Paid To): the two rules are otherwise identical and both pass risk at first-carrier handover, but under CIP the seller must also obtain insurance for the buyer, whereas under CPT the seller arranges no cover. CIP differs from CIF in that CIP applies to any mode and requires a higher level of insurance cover, compliant with Institute Cargo Clauses (A) or similar, whereas CIF is for sea and inland-waterway transport only and requires only minimum cover.
Glossary
CIP (Carriage and Insurance Paid To)
Carriage and Insurance Paid To (CIP) is the any-mode Incoterm under which the seller contracts and pays for both carriage and insurance to bring the goods to the named destination, while risk passes to the buyer when the goods are handed over to the first carrier, not at that destination.