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Everything you need to know
What is Trade Credit Insurance
Trade Credit Insurance
Trade credit insurance pays an agreed share of unpaid invoices when a buyer becomes insolvent or fails to pay within the agreed time. Export policies can also cover political risks in the buyer's country.
Whether you're exporting garments to Europe or supplying machinery across India on credit, trade credit insurance helps protect your business from the cost of unpaid invoices.
Why Is This Policy Vital for B2B Businesses
Credit sales are often a company's largest asset. Trade credit insurance protects that cash flow and can help you offer credit to new buyers with more confidence.
Know your policy
Understand your insurance before buying
Who Needs Trade Credit Insurance?
Export-Oriented Manufacturers
Companies shipping goods internationally need protection against foreign buyer defaults, payment transfer restrictions, and cross-border payment failures. We can compare private trade credit cover with ECGC policies for your export receivables.
Textile & Garment Exporters
Fashion industry exporters face seasonal risks, long payment cycles, and buyer concentration requiring specialized credit protection.
Chemical & Pharmaceutical Suppliers
High-value B2B sales with 60-90 day payment terms need comprehensive customer default coverage.
Engineering & Capital Goods
Equipment manufacturers selling on credit face payment delays and buyer insolvency risks requiring protection.
MSME Suppliers & Distributors
Small businesses supplying to larger companies need protection against payment defaults threatening business survival.
Commodity traders
Large credit sales to a few buyers create concentration risk if one buyer defaults.
Banks, NBFCs and factoring companies
Cover for receivables they finance.
Types / Add-ons Commonly Offered
Whole Turnover Policy
Entire customer portfolio coverage.
Key Account Policy
Specific large customer protection.
Single Buyer Coverage
Individual buyer concentration risk protection.
Pre-shipment Protection
Buyer cancellation before dispatch coverage.
Political Risk Coverage
Currency, transfer, and sovereign risk protection.
Bad Debt Protection
Comprehensive insolvency and default coverage.
What Trade Credit Insurance Covers
Buyer Insolvency
Loss due to buyer's bankruptcy or formal insolvency proceedings preventing payment.
Payment Default
Non-payment by buyer for goods or services delivered within the credit period.
Protracted Default
Prolonged non-payment beyond agreed terms without formal insolvency.
Export sales only — Political risks
War, civil disturbance or government action in the buyer's country, and restrictions on transferring payment to India.
Buyer rejection
Buyer refuses to accept goods without a valid reason, subject to contract conditions. Genuine quality or delivery disputes are excluded.
Pre-shipment Cancellation
Buyer cancels the order before goods are shipped, causing financial loss.
Collecting bank failure
Non-receipt of payment due to failure of the bank collecting your payment.
Collection Costs
Legal and recovery expenses incurred while pursuing unpaid debts.
Inclusions & Exclusions
✓Inclusions
- Commercial Insolvency — Buyer bankruptcy, liquidation, and inability to pay due to financial distress.
- Protracted Default — Extended payment delays beyond 90-180 days from due date.
- Political Risks — Currency transfer restrictions, war, and sovereign payment failures preventing collections.
- Pre-shipment Losses — Buyer cancellation or insolvency before goods dispatch.
- Collection Expenses — Legal costs and debt recovery expenses up to specified limits.
✗Exclusions
- Trade Disputes — Quality issues, delivery disputes, and contractual disagreements excluded.
- Related Parties — Transactions with sister companies, subsidiaries, and group entities excluded.
- Known Risks — Customer payment problems existing before policy inception excluded.
- Unauthorized Sales — Credit extended beyond approved limits without insurer consent excluded.
- Indirect Losses — Loss of profit margins and opportunity costs beyond principal debt amount excluded.
FAQs
Policies cover an agreed percentage of the unpaid invoice; you bear the rest.
Yes! Export policies include political risks; domestic policies focus on commercial insolvency.
Protracted default is claimable after the waiting period in your policy; insolvency claims can be made once insolvency is confirmed.
Premium depends on your turnover, buyers, industry and payment terms.
Nope! Quality disputes and delivery arguments are excluded.
Insurers assess buyer financials, payment history, and market intelligence to set safe credit limits per customer!