Credit Insurance

Types of Credit Insurance

Choosing the right credit insurance policy is crucial to protecting your business from unpaid invoices and financial instability. The right policy ensures you get paid, safeguards your cash flow, and gives you the confidence to grow, without the risk of bad debt holding you back. With expert guidance, you can secure a tailored solution that fits your industry, customers, and growth ambitions.

Whole turnover policy

This is the most common type of credit insurance policy, providing comprehensive coverage for a business based on its turnover in domestic and or export markets. Pricing is calculated based on a number of factors, including trade sector, annual turnover and bad debt history.

Policies typically run for 12 or 24 month periods and can cover all clients (subject to their creditworthiness) that you trade with during this period.

Most policies will cover you for insolvency/administration, protracted default and even political risk.

Typically 90% indemnity (you receive £90k from a £100k claim).
Important to note – We only charge for the net turnover figure excluding VAT, intercompany sales, any sales not on credit and sales to government entities.

Named buyer policy

A named buyer policy allows you to cherry pick the clients who you decide you would like to insure. This could be due to their perceived credit worthiness, lack of trading history or % of your ledger. Although this sounds an attractive proposition, the underwriting criteria is usually stricter, so it can be more challenging to get certain limits agreed. If you are just giving an insurer a basket of horrendous credit risks, they’ll likely decline. Whereas a balanced portfolio of some strong, some weak and some in the middle usually allow for a better premium and risk appetite.

Single risk policy

Single risk insurance covers your key buyer in the event of non-payment. Although underwriting criteria is tough, it is possible for you to just cover your main debtor. The downside is that costs can be higher, and it leaves you susceptible to claims from the rest of your ledger. Usually we will look at a comparison between a Single Risk policy and one of the other policies so you can make a decision as to which is the most feasible for your own situation.