Selling on open account leaves a business exposed when customers fail to pay. Trade credit insurance covers commercial receivables against nonpayment caused by insolvency or protracted default of the buyer, and in some policies against political risks that prevent payment.

The insurer underwrites the creditworthiness of the insured’s customers and sets credit limits on each buyer. Premium is typically a percentage of insured turnover. When a covered default occurs, the insurer pays a high percentage of the outstanding debt after a waiting period and any deductible.

Coverage improves cash-flow certainty and can support higher sales volumes or better financing terms from banks. Claims require prompt notification and cooperation in recovery efforts. The product is widely used by exporters and by domestic companies with concentrated customer receivables.

• Coverage for nonpayment of commercial receivables
• Underwrites buyer credit limits
• Responds to insolvency or protracted default
• Supports sales growth and financing