Safeguard your business with credit insurance. Protect against the risk of non-payment from customers and improve cash flow.

All the businesses face some commercial and political risks which might impact the finances of the business. These risks can go beyond the level of control for any individual as well as for business. The working of any business can be affected due to financial loss which can happen due to various reasons. The credit policy comes into the picture when you have sold an item or a service to the client, but unfortunately, the payment gets stuck. In case this amount is huge; then it can also affect the business drastically.

The credit insurance is the policy which is specifically designed to combat such risks. The payment is made in a certain percentage. The credit insurance policy helps the business to overcome the loss/damage caused due to customer defaults. This leads to improvement in the quality, increasing business profits, and reduction in risk of unpredictable customer insolvency. The credit insurance policy protects against any loss incurred during the transportation/export of goods and services. There are several national as well as private companies which provide the credit insurance policy. This policy also provides coverage to the companies for their outstanding receivables which are within the approved credit limits, and hence protect the insured against non-payment risk by its buyers.

The Credit Insurance covers the commercial and political risk where commercial risks include insolvency of the buyers and non-payment by the buyer while political risks cover s several risks. The risks covered under the political risks are a general moratorium on payment by the government of buyer’s country, cancellation of import license, political events, and economic difficulties, legislative or administrative measures preventing payment. The risks of military or civil war, revolution, riot or insurrection, non-payment of government buyer and government decision preventing performance also falls under political risks.

There are five types of credit insurance i.e., Credit life insurance, credit disability insurance, credit involuntary unemployment insurance, credit property insurance, and trade credit insurance.

1. The credit life insurance helps to pay off the debt in the case when there is the sudden death of the insured person. 

2. In case, the insured is facing permanent disability due to any specific reason; the insurer will pay the existing debt. This is the case of Credit disability insurance. 

3. Credit involuntary unemployment insurance helps in paying debts if the insured person is involuntarily unemployed. 

4. In sudden cases of theft, loss, or damage to the collateral property, the credit property comes into the picture and gives protection to the collateral property. 

5. Trade credit insurance provides the indemnity for bad losses in the cases of debt receivables due to failure of customer repayment

6. The companies which have receivables on its balance sheet is especially prone to loss from the inability of a consumer to pay them, and these companies are the ones who can get enrolled for a credit insurance policy.