Here’s how credit insurance typically breaks down the types of buyers covered:
- Businesses: The primary focus of trade credit insurance is protecting against non-payment by other businesses (B2B transactions). This includes:
- Domestic customers within your country
- International customers in foreign markets
- Public Sector: Some credit insurance policies may extend coverage to government entities or public sector buyers depending on their country’s reliability and the specific policy terms.
Key Factors for Coverage:
- Buyer’s Creditworthiness: The insurance company assesses the financial health and credit risk of each buyer. Those with better credit profiles are more likely to be covered and have higher coverage limits.
- Policy Limits: Your policy will have overall coverage limits and may have per-buyer limits. Large, important customers might require individual approval.
- Exclusions: Policies typically have exclusions for factors such as pre-existing financial issues with the buyer or industries the insurer doesn’t want to cover.
Coverage Flexibility:
- Whole-Turnover Coverage: Insures your entire sales portfolio or a significant portion, offering broad protection.
- Selective Coverage: You choose specific buyers or groups of buyers to insure. This provides more control over cost and risk.
- Single-Buyer Coverage: Protection against non-payment from a specific crucial customer.
Important Notes:
- It’s essential to meticulously review your specific credit insurance policy to understand the exact types of buyers covered and any restrictions.
- Credit insurers continuously monitor and update their coverage based on market changes and the financial standing of different industries and businesses.