Trade Credit Insurance protects businesses against certain financial losses caused when customers fail to pay money they owe for goods or services supplied on credit terms.

It is sometimes also referred to as Credit Insurance or Accounts Receivable Insurance.

What risk does Trade Credit Insurance address? #

When a business supplies goods or services before receiving payment, it effectively provides credit to its customer.

If that customer later becomes insolvent or fails to pay, the supplier can be left with a significant bad debt.

Trade Credit Insurance can transfer part of this risk to an insurer.

What types of non-payment can be insured? #

Depending on the policy, cover can include losses resulting from:

• Customer insolvency.
• Bankruptcy or other defined insolvency events.
• Protracted default.
• Certain export or political risks.

Not every policy includes all of these events.

Does Trade Credit Insurance cover every invoice? #

No.

Cover is subject to policy terms and can depend on matters such as:

• The customer being an eligible buyer.
• An approved credit limit.
• Payment terms.
• Overdue reporting requirements.
• The cause of the non-payment.
• Policy excesses or uninsured percentages.

Trade Credit Insurance should therefore operate alongside the business’s own credit control procedures rather than replacing them.