Trade credit insurance is a policy that protects an insured from non-payment of commercial debt. In a world where most companies' accounts receivable make up a significant percentage of their assets, trade credit insurance provides protection against the risk that a customer may default on a debt.
Aside from offering protection to businesses, trade credit insurance can also help a business to grow. With a trade credit insurance policy, a business can feel more comfortable to pursue new, larger customers that would have otherwise seemed too risky.
Trade credit insurance policies are bespoke, often being tailored to the specific needs of a particular insured. That being said, most trade credit insurance policies include coverage for similar types of losses. Typically speaking, trade credit insurance policies will cover, among other things, losses in the event that:
More important for present purposes are the types of losses that are typically excluded from coverage in a trade credit insurance policy. Again, while each policy is unique, trade credit insurance usually excludes coverage for losses arising out of, among other things, the following:
