In most of the businesses, seller extends credit to buyer and allows him to make payment for goods bought or services availed after some period of time. In these kinds of transactions there is risk of buyer not making payment on time. Credit Insurance Policy or Trade Credit Insurance Policy protects the companies against customer defaults. It covers the sales of the companies to its buyers on credit against the risk of loss due to the insolvency of their customers. Commercial BusinessCredit Insurance plays a vital role in the trading cycle of any company by protecting profit, cash flows, sales growth, the balance sheet and a company’s customer base. It is also known as Commercial Credit Insurance can be of great help in growth of sales by allowing the secure development of new buyers, new markets and the credit extended to a buyer.
Scope of cover
Export Credit insurance covers:
Protracted Default or Delayed Payment by the debtors.
Natural disasters like earthquake, cyclone, floods, etc.
Import license cancellation
Protracted Default on State Owned Entities
Any measure taken by the country where buyer is located, preventing payment of a transaction.
Military or civil war, revolution, riot or insurrection
Non-Acceptance of goods
Sales to a private individual who intends to use the goods or service for non-professional purposes
Sales to an associate company (Political & AOG risk can be covered)
Sales under irrevocable and confirmed Letter of Credit
Loss due to Foreign currency fluctuations
A war between two or more of the following countries: France, China, Russia, the United Kingdom and the United States of America
A war between the Insured’s country and the country of the buyer
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