Transportation Operations LINCS Practice Exam

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How does Carriage Paid To (CPT) differ from Carriage and Insurance Paid To (CIP)?

CPT includes cargo insurance; CIP does not
CIP requires the buyer to pay for insurance; CPT does not
CIP covers only domestic shipments; CPT covers international shipments
CPT puts the responsibility for export clearance on the buyer

The correct answer is: CIP requires the buyer to pay for insurance; CPT does not

The distinction between Carriage Paid To (CPT) and Carriage and Insurance Paid To (CIP) primarily revolves around the inclusion of insurance coverage within the responsibilities of the seller. In the case of CPT, the seller is responsible for paying the transportation costs to deliver goods to a specified destination, but they are not required to procure insurance for the cargo in transit. On the other hand, CIP obligates the seller to pay for both transportation and insurance to protect the goods during transit. Thus, option B accurately reflects this difference, as it specifies that under CIP, the requirement for the seller to provide insurance exists, while CPT does not mandate such a provision. This means that in CIP arrangements, the seller's responsibility extends beyond just the cost of transportation to also include insurance coverage, offering greater protection to the buyer in case of loss or damage during transit.