Types of Credit Insurance
There are many types of trade credit insurance offered today and each can be further tailored to the specific security needs of the business.
a) Whole Turnover cover (the most common solution)
These comprehensive types of credit insurance policy cover the whole business. The trade credit insurance policy allows the business to offer credit up to a certain amount: anything above this figure must be agreed in advance by the insurance company. The premium paid is based on the turnover of the business.
b) Critical customer cover
This trade credit insurance policy allows a business to have insurance cover against a number of named customers (usually up to 10). Such customers may be under threat from insolvency, have a poor credit rating, or may be key customers. The business will be fully responsible for the remaining customers not covered by the credit insurance.
c) Specific risk cover
These trade types of credit insurance policy allow a business to have insurance against a single customer or a large contract. The premium paid is based on the contract value or the turnover of the customer over the policy period.
d) Export trade credit insurance
If a business trades outside of the UK, this policy can offer insurance against non-payment of overseas customers. This type of policy can also be extended to insure against a number of risks including political risk, social and economic instability, government intervention, insolvencies and defaults, currency issues and dis-honoured letters of credit. Political risks includes situations where the government cause the payment failure – examples include: public buyer default; export restrictions; import restrictions; political events; foreign currency shortages or restrictions, inconvertibility; contract termination; and contract frustration.
Rowlands & Hames can advise your business on any types of credit insurance cover, so to obtain a quotation, please visit Credit Insurance Quotations or call 01253 594211.