US: A guarantee to manufacturers, wholesalers, and service organizations that they will be paid for goods shipped or services rendered. Applies to that part of working capital which is represented by accounts receivable.
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Also known as “trade credit insurance” and “business credit insurance,” this coverage pays an agreed percentage of an invoice or receivable that is not paid because of protracted default, insolvency, or bankruptcy of the debtor. The coverage is written by only a few companies that specialize in credit insurance and is not available to individuals.
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US: Coverage against insolvency of a customer, which provides protection against payment default on loan, interest, or scheduled payments. Also known as “bad debts” insurance.
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Credit Insurance provides protection against loss resulting from default on the part of debtors. Insurance on a debtor in favour of a creditor to pay off the balance due on a loan in the event of death or disability of the debtor. Liability Insurance for abnormal loss from bad debts. With a view to standardizing the features of Credit Insurance products in India IRDA issued Guidelines on Trade Credit Insurance policies which are effective from 13th December, 2010. These guidelines specify that a policyholder should necessarily be a supplier of goods and services and his coverage under the policy should be towards loss incurred due to non-receipt of trade receivables. The credit cover can only be issued on whole turnover basis covering all buyers.
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MEDICAL,USA: Insurance coverage that will pay off an outstanding loan if the policyholder dies or makes loan payments if the policyholder becomes disabled.
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Optional coverage that pays off the balance of an outstanding loan in the event the insured becomes disabled, unemployed, or dies. Exact coverage depends on the particular policy. Variations include credit life (pays if the insured dies), credit health or disability (pays if the insured gets sick or becomes disabled) and credit unemployment insurance (pays if the insured involuntarily loses his job). Usually offered with credit cards, auto loans, and mortgages.
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UK: This covers businesses against losses due to ‘insolvency’ or ‘protracted default’ (failure to pay within 90 days of due date) of customers to whom credit has been granted. It is effectively bad debts insurance. Policies usually cover between 75 per cent and 90 per cent of the risk. The main policies: ‘whole turnover (UK)’, ‘whole turnover (export)’ ‘specific account(s)’, ‘catastrophe’, i.e. cover that is triggered once an aggregate bad debts figure has been exceeded. See EXPORT CREDIT INSURANCE; OVERSEAS INVESTMENT INSURANCE.