Trade Credit Insurance
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What is Trade Credit Insurance?
Trade credit insurance is a type of insurance policy that protects you against the risk of your customers defaulting or delaying the payment on credit sales. The credit insurance cover will compensate the seller if the buyer fails to make the payment due to bankruptcy or lack of funds and any other reason.
Why Do You Need Trade Credit Insurance? What are the Types?
Credit insurance is a protective shield for your business. If a key customer turns insolvent and defaults on a big payment or run away from the market and overdue it can adversely affect your finances.
The credit insurance policy also protects the exporters against geopolitical risks, foreign trade restrictions, and currency risks.
Types of Credit Insurance
Some of the common types of trade credit insurance are as follows
Whole Turnover Policy:
This covers the entire credit portfolio of a business. It is the most comprehensive insurance policy as it covers all credit sales. The policy is best suited for businesses that depend heavily on credit sales
Key Customers Policy
This policy insures only the major customers who account for a significant share of your business
Single Buyer Policy
This debt insurance policy protects the business against default by a single customer
This type of policy provides cover on a transactional basis
What is Covered Under Trade Credit Insurance?
Credit insurance usually covers the following types of risks
Foreign government actions, such as trade restrictions, license cancellation, currency issues, etc., are also covered under debt protection insurance.
What is Not Covered Under Trade Credit Insurance?
Trade credit insurance does not cover the following:
What are the preferred Industries to have Credit Insurance?
Oil & Gas
Food & Beverages
Retailers & Wholesalers
What are the Benefits of Trade Credit Insurance?
Credit insurance cover provides multiple benefits
Protection of the company’s financials against bad debt
Reduction of bad debt provisions
Access to better financing facilities
Prevention of losses in advance
Certainty of sales, cash flows, and profits
Better credit decisions
Better information about potential clients from the insurers helps businesses to expand overseas and tap foreign markets
Protection of stakeholders’ interests
How does Trade Credit Insurance Work?
Credit insurance companies typically adopt the following procedure
1. Assessment of the buyer’s risk profile & calculation of risk premium
2. Fixing the credit limit for each buyer. Suitable adjustment of the credit limit upon risk evaluation
3. Settlement of claims after due investigation
Why Do You Need to Choose Us to Buy Credit Insurance?
Credit insurance with PIB Secure offers the following advantages:
Best benefits with low premiums
Excellent support for claims settlement
A top player in trade credit insurance UAE
Frequently Asked Questions On Trade Credit Insurance
Trade credit insurance is a risk management tool that protects businesses from the risk of default on their credit sales.
Every business that extends credit limits to its customers needs credit insurance. The policy effectively covers both domestic & international trade.
Several credit insurance companies in UAE offer trade credit insurance. PIB Secure offers credit insurance policies with attractive features at the best prices
Yes. Debt insurance policies can be customized to suit your specific business requirements. Standard policies are also available for small businesses.