How Trade Credit Insurance Can Protect Your Company
By: Christopher R. Rourke
A company will typically utilize traditional property/casualty insurance products to protect its physical assets, various liabilities and employees. Trade Credit Insurance is an additional tool that can help protect accounts receivables against non-payment by commercial customers.
In deciding if this type of insurance might be right for your company, here are answers to some commonly asked questions.
- Exactly what is Trade Credit Insurance?
Answer: It is an insurance product that can help protect the accounts receivables of a company against the insolvency of, or non-payment by its corporate customers.
- Why would a company consider buying Trade Credit Insurance?
Answer: Most often it is used to help protect a significant concentration of accounts receivables against potential non-payment.
- What types of companies buy Trade Credit Insurance?
Answer: All types. Availability and cost will vary by industry sector and specific company / customer profile.
- What types of customers (buyers) can be covered?Answer: Commercial customers. Various options are available such as domestic only, foreign only, both domestic and foreign, its top 10 or 20 buyers, etc.
- Is this insurance expensive?
Answer: It depends on many factors, but costs are often reasonable. Minimum premiums can start as low as $5,000.
- Is this insurance available even in uncertain / tougher economic times?
Answer: Yes. Insurance companies are very active in the current economic environment.
- Are there other benefits to buying this insurance product besides protecting against significant non-payment loss?Answer. Yes there are. Among others, securing Trade Credit Insurance can often support more attractive bank financing.
While these high level questions and answers should be helpful in providing some initial information about this product, we strongly suggest that you work with an insurance broker who specializes in Trade Credit Insurance to learn much more about this coverage, its features and benefits, and how it may be able to assist your specific company.
At Aronson Insurance, we have experience in this area and would be happy to answer your questions and see if we can be of assistance. Please contact us at firstname.lastname@example.org.