CIP vs DAP: Liability Attribution and Claims Process for Goods Damaged in Transit

CIP vs DAP: Liability Attribution and Claims Process for Goods Damaged in Transit

Abstract

In international trade, CIP (Carriage and Insurance Paid To) and DAP (Delivered at Place) are two commonly used trade terms, but they differ fundamentally in risk allocation and claims mechanisms. Based on the latest Incoterms® 2025 rules and ICC arbitration cases from 2024-2025, this article systematically addresses the following core issues:

1. How is liability determined for goods damaged during sea/air/land transport under CIP vs DAP?
2. How to build a critical evidence chain for insurance claims?
3. What changes apply to disputes involving special goods like lithium batteries and chemicals under 2025 regulations?
   Through 7 real-world dispute cases and 3 standardized claim templates, we provide end-to-end risk control solutions for trading companies.

I. Liability Boundaries Between CIP and DAP (Incoterms® 2025 Edition)

1.1 Core Differences in Risk Transfer

Case 1: A Shenzhen chip supplier exported goods to Germany under CIP in 2024; moisture damage occurred during air transport:

• Liability: Seller (risk not yet transferred)
• Claim path: Full recovery (110% value) via seller’s All Risks policy

1.2 New 2025 Liability Clauses

• CIP: Sellers must cover “logistics data tampering due to cyberattacks” (new add-on coverage)
• DAP: Buyers bear “demurrage from port strikes” (previously shared risk)

II. Liability Determination Flowchart for Damaged Goods

2.1 Four-Step Decision Tree

graph TD
    A[Damage Occurs] --> B{Risk Transferred?}
    B -->|CIP: No| C[Seller Files Claim]
    B -->|DAP: Yes| D[Buyer Files Claim]
    C & D --> E[Verify Insurance Coverage]
    E --> F{Covered?}
    F -->|Yes| G[Claim from Insurer]
    F -->|No| H[Liable Party Bears Loss]

2.2 High-Frequency Dispute Scenarios

III. Step-by-Step Insurance Claims Guide

3.1 CIP Claims Triad (Seller-Led)

1. Policy Validation
   • Confirm “Warehouse to Warehouse” clause inclusion
   • Ensure deductible ≤5% of cargo value
2. Evidence Chain
   • Pre-shipment photos (showing intact goods)
   • Third-party inspection report (e.g., SGS damage assessment)
   • Transport temperature logs (for cold chain)
3. Timeline Control
   • Notify insurer within 48 hours
   • Submit full documentation within 60 days

Template 1: Bilingual CIP Damage Claim Letter

[Insurer Name]:  
Our shipment of [goods] (Policy No.: [number]) via [carrier] on [date] sustained [damage type] at [location].  
Attached evidence:  
1. Pre-shipment inspection report (Attachment 1)  
2. Damage photos (Attachment 2)  
Please process payment by [deadline].  

3.2 DAP Dual-Phase Claims (Buyer-Led)

Phase 1: Carrier Claim

• Seek limited compensation (~$500/container) under Hague-Visby Rules

Phase 2: Insurance Claim (if buyer insured)

• Prove damage occurred post-risk transfer (GPS logs + pre-unloading survey)

Case 2: 2025 Brazil iron ore DAP shipment with weight shortage:

• Buyer recovered $120,000 via notarized pre-unloading report

IV. 2025 Special Cargo Dispute Upgrades

4.1 Lithium Battery Transport Rules

4.2 Chemical Spill Liability

• CIP: Seller needs pollution liability coverage (≥$1M)
• DAP: Buyer must pre-file MSDS documents

V. Dispute Resolution Pathways

5.1 Arbitration vs Litigation

5.2 Recommended Clause

"All disputes submitted to [Singapore International Arbitration Centre], governed by Incoterms® 2025"

VI. Risk Control Checklist