Trade credit insurance
Cover for a business selling on credit: it responds when a buyer does not pay because of insolvency or prolonged default, so a bad debt does not become your loss.
What it covers
Cover varies between insurers and plans. The policy wording is what decides whether a claim is payable, so read it before you buy.
- Non-payment by a buyer because of insolvency
- Protracted default, once the waiting period in the policy has passed
- An agreed share of the insured invoice value
- Sales to buyers on the approved list, within the credit limit set for each
- Collection costs, where the policy includes them
Key features
- Cover on your whole turnover, or on named buyers, as the insurer agrees
- Each buyer is given a credit limit by the insurer, and you trade within it
- The insured percentage is less than the full invoice, so you retain a share of the risk
- A maximum extension period, and a waiting period before a protracted default claim: [WAITING PERIOD]
- Credit management conditions: report overdues, stop supply when told, and follow your own terms of sale
- Buyer limits are reviewed during the year as buyers' positions change
How to buy it
Four steps, with an advisor you can reach at any of them.
Tell us about the risk
Tell us your turnover, credit terms, buyer list with exposures, and your bad-debt experience so far.
Underwriting details
An advisor collects the information insurers need to price the risk, and flags anything missing.
Compare quotes
We ask our partner insurers to quote, and put the cover, conditions and premium side by side.
Proposal & policy
Pick a quote, complete the proposal form and KYC, and the insurer issues the policy.
Trade credit insurance: FAQs
Does it cover a buyer who refuses to pay because of a dispute?
No. Trade credit covers insolvency and protracted default, not commercial disputes over quality, quantity or contract performance. A disputed invoice has to be resolved first.
Do I have to insure all my buyers?
Whole-turnover cover is the usual structure, because insurers need spread. Named-buyer or key-account structures exist, and are priced for the concentration.
What is protracted default?
Non-payment that continues beyond the period the policy sets, without a formal insolvency. The policy states the waiting period before a claim can be made: [WAITING PERIOD].
Will my bank lend more against insured receivables?
Often yes, and the policy can be assigned to a lender. Whether and by how much it improves your facility is a matter between you and the bank.