Trade Credit Insurance
Protecting Your Business Against Customer Non-Payment
What is Trade Credit Insurance?
Trade Credit Insurance is a type of business insurance that protects companies against non-payment of commercial debts. It covers businesses when customers fail to pay for goods or services due to insolvency, bankruptcy, or prolonged default. This insurance provides peace of mind to businesses by ensuring that they
customers fail to pay for goods or services due to insolvency, bankruptcy, or prolonged default. This insurance provides peace of mind to businesses by ensuring that they are protected against the risks of bad debt, which can have a significant impact on cash flow and financial stability.
Key Benefits of Trade Credit Insurance
Protection Against Non-Payment
Covers losses arising from customer insolvency, bankruptcy, or non-payment, protecting the company’s bottom line.
Improved Cash Flow
Provides financial stability by ensuring that unpaid invoices do not severely disrupt cash flow.
Risk Management
Helps businesses expand into new markets or take on new clients by reducing the risks associated with extending credit.
Support for Growth
By safeguarding receivables, companies can confidently extend credit terms to customers and invest in growth initiatives.
Industries That Need Trade Credit Insurance
Manufacturers and Exporters
Claims from shareholders related to poor management decisions.
Distributors and Wholesalers
Helps mitigate risks when providing goods or services on credit to customers across various sectors.
Service Providers
Protects service-oriented businesses from the risk of customer default or insolvency.
How Trade Credit Insurance Works
Application Process
Businesses apply for trade credit insurance by providing details of their customer base, payment terms, and financial risk exposure.
Underwriting
The insurer evaluates the creditworthiness of the company’s customers and determines the level of risk.
Policy Issuance
The policy is issued, covering the business against losses from unpaid invoices due to customer insolvency or non-payment.
Claims Process
If a customer defaults on payment, the business files a claim with the insurer, who compensates for the unpaid amount, subject to policy limits.
Why Brokers Should Offer Trade Credit Insurance
Protect Client Cash Flow
Trade credit insurance provides a critical layer of protection for businesses that rely on extending credit to customers.
Help Clients Grow with Confidence
Offering trade credit insurance allows businesses to expand their customer base and take on new clients while minimizing financial risks.
Diversify Coverage Options
Adding trade credit insurance to your service offerings provides clients with a comprehensive risk management strategy.
Contact Us for Trade Credit Insurance Solutions
Help your clients protect their business from the risks of non-payment and bad debt. Contact us today to learn more about trade credit insurance and how it can safeguard your client’s financial future.
FAQs about D&O Insurance
What does trade credit insurance cover?
Any company with a board of directors or corporate officers, including publicly traded and private companies,
should have D&O insurance.
How much does trade credit insurance cost?
The cost of trade credit insurance varies based on the size of the business, the amount of coverage required, and the creditworthiness of the customer base.
Is trade credit insurance suitable for all businesses?
Yes, businesses that extend credit to their customers, regardless of industry, can benefit from trade credit insurance.
Can trade credit insurance cover international transactions?
Yes, trade credit insurance can cover both domestic and international sales, protecting businesses from risks associated with foreign buyers.
How are claims handled in trade credit insurance?
When a customer fails to pay, the business submits a claim to the insurer, who compensates the business based on the policy’s terms and coverage limits.
