Credit Insurance and Accounts Receivable Insurance

Your Free Online Resource To Learn The Ins And Outs Of Credit Insurance And Risk Management Solutions provides unbiased information to help you make the best decisions for your business!

Welcome to Credit Insurance

What is Credit Insurance?

Credit Insurance protects your accounts receivable against non-payment. In other words, Credit Insurance pays you when your customer (debtor) does not, simple as that!

Who Uses Credit Insurance?

If your business sells to other businesses on open account, you should consider using credit insurance. All open account sales involve risk. The more customers you have on open account the greater the risk.

Enter your data to see a quotation

Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Compare plans, insurers, coverage & prices

Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Receive your electronic policy by e-mail

Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Company information

What are the Benefits of Credit Insurance?

It is commonly used to increase sales, increase borrowing availability and catastrophic loss prevention, and more importantly, ensure protection against non-payment. Credit Insurance affords political risk (the inability to convert currency in a foreign country) coverage on export receivables. Credit Insurance allows your company to increase sales by expanding credit lines to existing clients, and offering credit to new clients. It can also assist in accounts receivable financing and a lender can be named as beneficiary under the contract.

The tables below illustrate the benefits of Credit Insurance

Catastrophic Loss Protection

Without Insurance

With Insurance

Increase Borrowing Potential

Without Insurance

With Insurance

Increase Sales Growth

Without Insurance

With Insurance

Common Misconceptions



What Does It Cost?

Accounts receivable insurance carriers have many different ways to compute premium rates such as sales (coverage, A/R, flat rate, and limit of liability base pricing methodologies, just to name a few). Please know all carriers look for a reasonable spread of risk. If you have one troubled debtor and trying to lay off that one risk, this product is probably not for you.

The two most common methods of computing premium rates are annual insured sales based pricing and coverage based pricing:

Annual insured sales based

Many factors go into determining the net annualized premium rate: policy face, industry risk, debtor pool average financial stress score, deductible, co-insurance, and policy features.

Coverage Based

The same factors as annual insured sales based affect the pricing of coverage based. Below is an example of how coverage based pricing works. It is an illustration only.

Annual Insured Sales Based Example

Generally speaking, the premium is calculated at a rate between $.10 – $.20 cents per $100 of domestic insured sales. This is typically for terms of sale up to 60 to 90 days. Terms of sale n7, n14, n21 up to n30, have lower rates. Export insured sales are calculated at rate between $.20 – $.30 cents per $100 of insured sales. Of course, concentrations in either high-risk countries or high-risk debtors can cause these rates to change.

When domestic and export sales are combined, there can be a blended rate or there can be a specified domestic rate and a specified export rate.

Below is an example of how annual insured sales based pricing works. It is an illustration only. Larger companies with more insured sales/coverage can expect to pay lower rates.


Coverage Based Example

The same factors as annual insured sales based affect the pricing of coverage based.

Below is an example of how coverage based pricing works. It is an illustration only.


Each of these methods have their own strengths and weaknesses.

There is no perfect way to price credit insurance. As a general rule of thumb, if you are regularly making changes and need coverage decisions from the carrier, annual insured sales based pricing is often a good solution. 

If you have stable clients and coverage needs (not frequently adding, removing, increasing, decreasing) coverage based pricing may be a better fit for your company.

Contact a Professional

Want to speak to a professional about your Credit Insurance needs?

Working with a specialist can help you determine the best custom solution for your unique needs

Latest Articles

With your business receivables insured, you leverage your acounts receivable to borrow more money at a relatively low incremental cost.

enquiry form


Frequently asked questions

A. No. Credit life or credit disability insurance is obtained by individuals to help pay debts in case of loss of income. Business credit insurance (also known as trade credit insurance, export credit insurance, or just credit insurance) is used to reduce the risk of non-payment in B2B transactions and is obtained by the company offering the goods or services, rather than the company receiving the goods or services.

A. There is no additional fee to use a broker. By law, you will pay the same rates for the coverage you choose whether you use a broker or work directly with the insurance company. However, a broker helps you evaluate quotes and implement your new policy. Brokers can also help with mandatory reporting requirements and may help you review future claims submissions.

A. The short answer is yes — because things can change. Business insolvency is predicted to increase due to global events. Evaluating the risk of non-payment requires considerable data collection and analysis. Your broker can help you figure out the right amount of coverage for your situation.

A. Trade credit can help you grow your business. When a business is able to purchase goods or services with trade credit, it frees up cash flow, making it a source of short-term financing. This practice allows the business to potentially expand its market or customer base without the negative impact of running out of cash, potentially putting them out of business. Many trade credit agreements incentivize paying early with a discount, so the business is able to decide whether to pay early at a cheaper price or to take longer to pay at full price — based on both money coming into the business and other expenses that need to be paid.