Credit Insurance: Insurance for Late Payments or Nonpayments
Recent events and the decline of the global economy have brought a raft of notices of late payments or no payments for creditors, lenders, landlords, and trade counterparties. In many instances there may be no notice at all, but rather just silence and a nonpayment. With the downturn and record number of layoffs and closures also comes the specter of further prolonged defaults and bankruptcies.
Is there insurance to protect against a nonpayment? Yes. Beyond Business Interruption / Business Income and other insurance policies that cover losses from recent events and business suspension losses, there is specific insurance designed to protect against the risk of nonpayment of a debt: Credit Insurance / Trade Credit Insurance.
What Is Credit Insurance?
Credit insurance protects those that purchase the insurance against the risk of nonpayment of an insured debt. Purchasers of credit insurance can fall within a wide array of businesses—lenders, exporters, commodity traders, product suppliers. Credit Insurance is typically used to protect a company’s own account receivables (“AR”) against the risk of nonpayment.
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