What is credit insurance?
Credit Insurance is a commercial insurance designed to protect any business selling goods or services to their business customers on credit terms. Credit insurance covers the risk of non-payment by a business customer as a result of insolvency or protracted default. Insolvency is viewed as the formal failure of the business customer and protracted default covers the situation where the business customer admits liability for payment but does not pay within an agreed credit period after the original due date.
The protection provided by a credit insurance policy covers as standard goods sold and delivered and/or services rendered. The cover can be extended to cover a number of other situations, such as work in progress and binding contracts. For exporters, the cover may also be extended to cover certain political risks preventing or delaying payment. Examples include war or civil war in your customer's country, cancellation of the contract by the government of your customer's country, or government regulations such as embargoes or quotas that prevent the export or import of goods