Trade Credit Insurance, the type of credit insurance that protects businesses, typically covers the following products and services:
Eligible:
- Physical Goods: The majority of credit insurance policies focus on the sale of tangible goods, including:
- Raw Materials
- Finished products
- Machinery and Equipment
- Consumer goods
- Services: Some policies extend coverage to services, particularly when they:
- Are provided on credit terms
- Involve a clear deliverable
- Are part of a larger project with physical components
Examples of potentially eligible services:
- Consulting
- Engineering and Design
- Software Licenses (tied to certain deliverables)
- Installation services
- Maintenance contracts
Ineligible:
- Retail Sales (Typically): Sales directly to consumers are generally not covered, as these usually involve immediate payment methods and smaller transaction amounts.
- Financial Instruments: Investments, securities, or purely financial transactions are not covered as credit insurance protects against non-payment for goods and services.
- Projects with High Customisation: Extremely specialized or unique projects can be challenging to insure due to difficulty valuing potential losses and the bespoke nature of contract terms.
Important Considerations:
- Policy Specifics Each insurer has unique eligibility criteria. It’s critical to review the specific terms and what is defined as an “eligible sale” under your policy.
- Evolving Coverage: The scope of eligible services is expanding in some instances as service-based business models become more prominent.
- Risk Assessment: The insurer will consider factors like the tangibility of the service deliverables and the ease of establishing value in case of non-payment disputes.
If you have a particular type of product or service in mind, it’s best to speak directly with a credit insurance provider to determine eligibility and discuss customized options.