CFR vs CIF: What's the Difference?

What CFR and CIF have in common

Both CFR (Cost and Freight) and CIF (Cost, Insurance and Freight) are Incoterms rules used for sea and inland waterway transport. Under both, the seller arranges and pays for freight to the named port of destination, and risk transfers to the buyer once the goods are loaded on board the vessel at the port of origin.

The key difference: insurance

Under CIF, the seller is additionally required to procure minimum marine insurance cover for the goods during transit, naming the buyer (or another party as agreed) as the beneficiary. Under CFR, no such obligation exists — the buyer must arrange their own insurance if they want transit cover.

Why this matters when comparing quotations

A CIF quotation will generally be priced slightly higher than an equivalent CFR quotation because it includes insurance cost. Buyers comparing quotations should confirm which Incoterm each price is based on, rather than comparing a CFR price against a CIF price as if they were equivalent.

Buyers should also check the level of insurance cover included under CIF — the ICC rules specify only a minimum cover requirement, which may be less than what a buyer actually wants.

Risk transfer is the same under both terms

A common misconception is that CIF means the seller bears risk until the goods arrive at destination. In fact, under both CFR and CIF, risk transfers to the buyer once goods are on board the vessel at the origin port — the seller's insurance obligation under CIF does not change this risk transfer point.