A more thorough explanation:

Cost, Insurance, and Freight (CIF) is a term used in business contracts that outlines the responsibilities of the buyer and seller when it comes to the delivery, payment, and risk of loss of goods. When a seller agrees to CIF terms, they must:

1. Clear the goods for export
2. Arrange for transportation by water
3. Procure insurance against the buyer's risk of damage during carriage
4. Pay the costs of shipping to the port of destination

Once the goods are loaded onto the receiving ship while docked in the port of shipment, the seller's delivery is complete, and the risk of loss passes to the buyer. CIF terms are only used when goods are transported by sea or inland waterway.

Let's say a company in the United States wants to purchase 1,000 widgets from a company in China. The two companies agree to CIF terms, and the Chinese company is responsible for clearing the goods for export, arranging for transportation by sea, procuring insurance against damage during carriage, and paying the costs of shipping to the port of destination in the United States.

Once the widgets are loaded onto the ship in China, the Chinese company's delivery is complete, and the risk of loss passes to the U.S. company. If the widgets are damaged during transit, the U.S. company can file a claim with the insurance company procured by the Chinese company.

This example illustrates how CIF terms allocate the responsibilities of the buyer and seller when it comes to the delivery, payment, and risk of loss of goods.