Credit Insurance - Credit insurance is a commercial insurance contract that can be purchased to cover your business against the possibility of bad debts. These bad debts can be caused by Insolvency or simply long-term non-payment. Cover is usually available to cover UK and overseas customers.  Most providers of this type of insurance can tailor a policy to suit your individual needs and can also provide you with accurate Financial Information regarding your customers. 

Types of Credit Insurance - a number of different types of cover is available including the following:-

• Whole Turnover Domestic Credit Insurance - This type of contract is arranged to cover your entire business turnover with customers in the UK against insolvency and default.  Insurance policies are usually taken out with an excess of between of £500-£1,000.  Excess is the portion of each and every loss that you will have to pay yourselves).  Many insurers offer fixed premiums inclusive of credit limit charges as well as an integral collections facility.

• Whole Turnover Export Credit Insurance - Usually arranged as per the above contract but providing worldwide credit insurance cover.

• Combined Domestic and Export Credit Insurance - as per the Whole Turnover Domestic Credit Insurance contract, but specifically designed to cover a combination of domestic and export sales.
   

• Specified Account Credit Insurance - this type of credit insurance is normally designed to cover a single customer, (typically the largest customer). Most contracts of this nature cover insolvency only and an “indemnity” is applied to the credit limit granted, usually 80-90%. This type of contract is not designed to cover a customer where there is perceived to be a higher than average risk of a chance of a loss

• Key Account Credit Insurance - this type of contract normally covers a selection of between 2 and 20 of your customers, which are usually the largest accounts on the books. These policies usually cover both insolvency and protracted default. Again an excess will normally apply to this type of insurance.

• Catastrophe Credit Insurance - this type of contract is designed to suit companies with a fairly large turnover, in excess of £10 million with highly developed credit control procedures.  In recognition of this, an insurer will normally “insure” the credit control procedures and sets an Annual Aggregate amount, in excess of which, claims are payable. The excess is usually a minimum of £25,000 and sometimes can be as high as £100,000. The insurer will pay all amounts in excess of this.

• Global Credit Insurance - this type of credit insurance is designed for a company that trades on a global basis with perhaps operations in many different countries. The cover can be provided for Turnover or on a Catastrophe basis and usually can be tailored to suit your own needs

Information Required - if you are interested in credit insurance, an insurer will require certain information in order to provide you with a quotation. Amongst the data that you will have to supply are the following:-

• Basic company information such as your contact details and company registration number.

• A description of your business and it’s activities.

• Details of your customer base usually to establish a profile of your customers.

• An estimate of your annual turnover split between the United Kingdom & Overseas.

• Details of your Standard payment terms and if you ever offer any extended credit plans.

• Historic Accounting details including details of any previous bad debts.

• Sight of your age debtors report.

• Your current sales edger.

• Details of your credit control process.