Trade credit insurance coverage applies to sellers of goods and services to protect them from bad debts when customers can’t pay. As a risk management tool, trade credit insurance can cover risks (subject to applicable limits) including:
- Destabilizing political conditions
- Acts of war
Since the risk of default drops with trade credit insurance coverage, companies can offer more generous credit terms and attract new buyers, you may be able to get more favorable terms if your receivables are secured by trade credit insurance.
Trade credit insurance coverage is flexible. Your company may choose to cover all your trade credit accounts, or you may opt to extend coverage to specific customer accounts with a higher risk to your company. For example, customers who make large purchases pose a higher risk to your company if they don’t pay. Or, you may extend coverage to new buyers with whom you don’t have an established credit history.