Trade credit insurance provides cover for businesses if customers who owe money for products or services do not pay their debts, or pay them later than the ...Home/Productsandissues/Choosingtherightinsurance/Businessinsurance/TradeCredit/WhatistradecreditinsuranceMenuTradeCreditWhatistradecreditinsuranceHowtradecreditworksWhyshouldbusinessestakeouttradecreditinsuranceBuyingtradecreditinsuranceWhatistradecreditinsurance?Tradecreditinsuranceprovidescoverforbusinessesifcustomerswhoowemoneyforproductsorservicesdonotpaytheirdebts,orpaythemlaterthanthepaymenttermsdictate.Itgivesbusinessestheconfidencetoextendcredittonewcustomersandimprovesaccesstofunding,oftenatmorecompetitiverates.Tradecreditinsuranceisforproductsandservicesthatareduewithin12months.AccordingtoGovernmentstatistics,therewereover17,000newinsolvenciesin2019CovercanbeobtainedbycompaniestradingwithintheUKaswellasinternationally,andinadditiontradecreditinsurershelptheircustomersmanageriskbyprovidingguidanceandadviceaboutcreditrisksandnewmarketstohelpbusinessesexpand.Businessescanbuytradecreditinsurancefortheirentireportfolioofcustomers,orforindividualaccounts.Withtradecreditinsurance,thepolicyholderknowstheirbusinessisprotectedagainstbothcommercialandpoliticalrisksthatarebeyondtheircontrolknowingthatmoneyowedtothemwillbepaid.Thishelpsfirmstogrowprofitably,supportingthematallstagesofthebusinesscycleandminimisingtherisktothemofunexpectedcustomerinsolvency.Tradecreditinsurerswillgenerallycovertwotypesofriskthatabusinesscanincludeintheircover:Commercialrisk -theriskthatyourcustomersareunabletopaytheoutstandinginvoicesbecauseoffinancialreasons,forexample,declaredinsolvencyorprotracteddefault.Politicalrisk -non-paymentasaresultofeventsoutsidethepolicyholderorcustomer’scontrol,forexampleduetopoliticalevents(wars,revolutions); disasters,(earthquakes,hurricanes);oreconomicdifficulties,suchasacurrencyshortagesoareunabletotransfermoneyowedfromonecountrytoanother.In2019,ABImembersalonesupportedbusinessturnoverworthover£366