Credit Insurance

Credit insurance is the other name for Trade Credit Insurance or Business Credit Insurance. This is an insurance product that provides coverage to companies in case of bad debt. For instance, if any of your customers default in making payments, the credit insurance policy covers for the loss and you get paid by the insurer.

How can credit insurance help you? You can benefit from a credit insurance policy in the following ways-

  • Growth in Sales

If you buy credit insurance, you are in a position to offer more lines of credit to your customers, whether to existing or new ones. If you are into export, it enables you to extend open account terms to overseas clients. You are not required to insist upon other modes of secured payments or letters of credit.

  • Credit Risk Protection

If one of your main customers defaults in making payments, credit insurance extends protection against bad debt.

  • Bank Financing gets enhanced

Your borrowing capacity increases if you are into asset based borrowing. You enjoy reduced fees and your account receivables are also protected.

Types of credit insurance Credit insurance can be of different types.

Credit insurance policies offering protection to business entities are very flexible and can be tailor made to suit the convenience of a business organization. These insurance policies provide coverage either for domestic business, export business or both. You can opt for insurance coverage that will protect your entire business, larger accounts, particular products or if you sell your products to certain countries, it will provide protection for sale of products only to those countries.

Credit insurance policies can also be written for smaller firms, mid sized firms or large multinational firms operating in United States.

Types of risks that are covered by credit insurance Credit insurance will provide coverage in case of the following-

  • * Transfer of assets
  • * Insolvency
  • * Political risks
  • * Receivership
  • * Preferential payment
  • * Unsatisfactory judgments
  • * Risk involved when a particular task is in progress