Trade Credit Insurance can protect a business against certain losses resulting from non-payment by customers to whom goods or services have been supplied on credit.

The exact cover varies between policies.

What causes of non-payment can be covered? #

Depending on the product, insured events can include:

• Customer insolvency.
• Bankruptcy.
• Administration or liquidation.
• Protracted default.
• Other defined inability to pay.
• Certain political or export risks.

Some policies cover only particular causes of non-payment.

How much of the debt is insured? #

Trade Credit policies commonly leave part of the risk with the insured business.

The insurer may therefore pay an agreed percentage of an insured loss rather than 100% of the outstanding invoice.

The policy can also contain:

• Excesses.
• Deductibles.
• Maximum liability limits.
• Buyer credit limits.
• Other restrictions.

Are disputed invoices covered? #

A commercial dispute can affect whether a debt is payable under the policy.

Trade Credit Insurance is designed primarily to insure credit risk rather than resolve disagreements about whether goods or services were properly supplied.

Where an invoice is disputed, the insurer may require the underlying dispute to be resolved before an insured loss can be established.

Does cover replace normal credit management? #

No.

Businesses generally still need to:

• Assess customers.
• Follow payment terms.
• Monitor overdue accounts.
• Report overdue debts when required.
• Follow the insurer’s credit limit decisions and policy conditions.