Credit Insurance

This section provides answers to the following questions:-

Why is Credit Insurance Needed?
What Cover does a Credit Insurance Policy Provide?
How Much Credit insurance Cover Will my Business Need?
Compare Credit Insurance Quotes Now

Why is Credit Insurance Needed?

Trade Credit insurance covers businesses against the risk of bad debt due to the insolvency or default of their buyers.

This cover can be important for credit management within your business, and can also provide a replacement of working capital when bad debts and late payment impact on cash flow. In addition, credit insurers provide complementary services such as credit assessment and collections management.

What Cover does a Credit Insurance Policy Provide?

Credit insurance protects the business in the event that any of its debtors goes bankrupt. You can insure your business' turnover and even individual accounts, but it is unlikely you will be able to cover all of your turnover.

A credit insurance policy provides cover for goods sold and delivered or invoices raised for services rendered against the non-payment of debtors. Your debtors may be unable to pay due to their insolvency or because they just cannot pay or have gone away.

Your business will also be protected from non-payment by debtors in the event of political intervention (eg in the event of a civil war) that prevents payments being transferred to the UK from overseas.

There are five types of credit insurance policy:

1. Whole Turnover Cover
This is the most common form of credit insurance, and it will cover your entire customer base. Many insurers now offer fixed premiums for this cover.

2. Specific Account Cover
This provides cover against the failure of a single customer - normally this will be for the largest customer on your customer base. Cover is available on an annual basis, or for the duration of the contract.

3. Key Account Cover
This cover is for your business' largest customers, and a single policy could cover up to 40 customers.

4. Excess of Loss/Catastrophe Cover
This is specifically designed for medium and larger companies with a turnover in excess of £10 million who will cover a certain amount of bad debt themselves. This policy kicks in once that level has been exceeded.

5. Group and Global Cover
This is an all-encompassing product for group or multinational companies to cover all their subsidiaries or branches both in the UK and overseas.

How Much Credit Insurance Cover Will my Business Need?

This will depend on the size of your business, what trade sector you operate in, and what proportion of your turnover you want to protect.

Insurers will calculate your premium taking into account the factors mentioned above and others such as the overall quality of your customers, the geographical spread of your export sales, your previous bad debt loss history and the quality of your credit control procedures.

Compare Credit Insurance Quotes Now

Credit Insurance Policies will shortly be available here at Coverzones.

Coverzones is a service specifically designed to cater to the needs of UK small businesses. We offer a variety of products and cover over 700 trades. Our online quotation service is free and easy to use so your small business can get tailored cover quickly and efficiently; freeing up time to focus on what matters most - managing your small business.

A free MyCoverzones account is offered to every customer and allows you to store quotes to refer to at a later date. Should you choose to purchase a policy, then you are free to simply click and buy through your account any time you choose. In fact, all small business insurance needs are catered for here at Coverzones with the facility to amend, renew, cancel and begin a claim, all made available to each small business user.