What are the main types of credit insurance?
There are five main types of credit insurance:
- Whole turnover: This covers a client’s entire sales ledger against non-payment through default or insolvency and is structured to suit the company’s specific needs and objectives.
- Single risk: This is designed to cover a named buyer or customer and is usually applied to a policy holder’s largest account. It gives a business the confidence to pursue other opportunities, because its most significant exposure is protected.
- Catastrophe: This offers a business protection against a single major catastrophe or series of failures. It supports a business if the worst happens and total policy losses breach an aggregated excess value.
- Top-up: This provides additional cover, using a separate policy to top up a restrictive credit limit decision.
- Political: Most credit insurance policies provide cover for the commercial risks of insolvency and default. Additional cover can be negotiated to provide protection when a specified political risk frustrates the contact of sale.