CIP vs DDP – who pays for what?
CIP is Carriage and Insurance Paid To and DDP is Delivered Duty Paid. We compare who pays for transport, customs clearance and duty, and where risk passes to the buyer.
Key differences
CIP and DDP allocate three costs differently. Under CIP, the seller covers insurance; under DDP, import clearance as well as import duty and VAT. The two rules also differ in the point at which risk passes to the buyer.
- Insurance
- CIPSellerDDPNo obligation
- Import clearance
- CIPBuyerDDPSeller
- Import duty and VAT
- CIPBuyerDDPSeller
- Risk passes
- CIPOn handover to the carrier in the country of dispatchDDPAt the place of destination, before unloading
Full cost breakdown
| Cost | CIP | DDP |
|---|---|---|
| Export clearance | Seller | Seller |
| Transport to the port or terminal | Seller | Seller |
| Loading for main carriage | Seller | Seller |
| Main carriage (freight) | Seller | Seller |
| Insurance | Seller | No obligation |
| Unloading at destination | Buyer | Buyer |
| Import clearance | Buyer | Seller |
| Import duty and VAT | Buyer | Seller |
| Risk passes | When the seller hands the goods over to the first carrier – even though the seller pays for transport and insurance. | At the place of destination, after import clearance, when the goods are ready for unloading. |
| Mode of transport | Any mode of transport (sea, rail, air, road) | Any mode of transport (sea, rail, air, road) |
Notes
- Unloading at destination: if unloading costs are included in the contract of carriage concluded by the seller, the seller pays them and cannot charge them to the buyer afterwards.
- Insurance: only the seller is obliged to insure, and only under CIF (at least Institute Cargo Clauses (C), 110% of the value) and CIP (Institute Cargo Clauses (A), 110% of the value). Under the other rules, nobody has to insure the goods – but once risk has passed, any loss is borne by the buyer.
What to watch for when importing from China
CIP Carriage and Insurance Paid To
In Incoterms 2020, CIP requires broader insurance than CIF: Institute Cargo Clauses (A) – “all risks” – at 110% of the value of the goods. Even so, the risk passes to you in China, when the goods are handed over to the carrier. The policy protects you, but the supplier takes it out – ask for a copy before shipment.
More about CIP →DDP Delivered Duty Paid
The supplier has to act as the importer in Poland: declare the goods for customs clearance and pay duty and VAT. A Chinese supplier is rarely able to do this on its own, so it uses intermediaries. Goods shipped under DDP sometimes do not go through proper import clearance – and it is then the consignee who has a problem with goods that were not legally released for free circulation. With a new supplier, DAP is the safer choice.
More about DDP →When to use CIP and when to use DDP?
- CIP – for any mode of transport, when the supplier arranges carriage and broad insurance cover (Clauses (A)), while you handle customs clearance in Poland.
- DDP – when the supplier is reliable and can legally clear the goods in Poland as the importer, and you want the goods delivered with duty and VAT paid.
Has your supplier quoted a price including transport?
Compare it with our offer for transport from China – by rail, sea or air – with customs clearance in Poland and cargo insurance. Send us your cargo details and we will prepare a quote tailored to your shipment.
Request a quoteFAQ
What is the main difference between CIP and DDP?
CIP and DDP allocate three costs differently. Under CIP, the seller covers insurance; under DDP, import clearance as well as import duty and VAT. The two rules also differ in the point at which risk passes to the buyer.
Where does risk pass to the buyer under CIP?
When the seller hands the goods over to the first carrier – even though the seller pays for transport and insurance.
Where does risk pass to the buyer under DDP?
At the place of destination, after import clearance, when the goods are ready for unloading.
Can CIP and DDP be used for rail freight from China?
Yes. CIP and DDP can be used with any mode of transport: sea (including containers), rail, air and road.
Compare other pairs
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). This page is an independent, simplified summary of how costs and risks are divided – it is not affiliated with or approved by the ICC. When drafting contracts, use the official text of the Incoterms® 2020 rules published by the ICC.