NATIONAL INSURANCE GUIDE

Trade Credit Insurance

📘 Trade Credit Insurance in the U.S.: Protecting Your Business From Non-Payment Risk

Trade Credit Insurance (TCI), also known as accounts receivable insurance, protects your business when customers fail to pay for products or services sold on credit. It covers losses from customer insolvency, bankruptcy, and protracted default. This type of insurance is especially important for companies that rely on consistent cash flow or serve a small number of large buyers.

💼 Key Benefits of Trade Credit Insurance (Expanded)

✅ Cash Flow Stability

When a buyer delays or defaults, it can choke your cash flow. TCI ensures you’re paid – usually up to 90% of the invoice – so you can continue operations, meet payroll, and reinvest in your business.

Example: A Midwestern auto parts supplier faced a $450,000 default from a regional distributor. Thanks to their TCI policy, they recovered $405,000 and avoided a major cash shortfall.

✅ Expanded Credit Sales

With TCI in place, you can offer higher credit limits and longer payment terms with less risk – helping you win new clients or increase orders from existing ones.

Why it matters: Buyers often choose suppliers based on terms. If you can safely offer Net 60 instead of Net 30, you gain a competitive edge.

✅ Improved Lending Terms

Banks consider insured receivables as high-quality collateral. This may lead to better borrowing terms, higher credit lines, or lower interest rates.

Real Case: A tech wholesaler in California used their insured A/R to secure a $3M line of credit, where the bank accepted 90% of insured receivables as collateral.

✅ Stronger Credit Management

Many policies include credit checks, buyer monitoring, and real-time alerts. This outsourced expertise reduces your credit risk exposure and flags warning signs early.

Bonus: Insurers have global databases with millions of buyer credit profiles – access you likely wouldn’t have on your own.

✅ Global Trade Confidence

When exporting to unfamiliar countries, TCI covers political risks like currency inconvertibility, war, embargoes, or government action.

Example: A South Carolina textile exporter was paid out after a major importer in Turkey defaulted due to local economic collapse. Without TCI, the loss would’ve exceeded $700,000.

⚖️ Legal and Real-World Case Examples

🧾 Court Case: Euler Hermes vs. Defaulting Insured (New York, 2021)

Euler Hermes denied a claim because the client failed to report a buyer’s delinquency within the policy’s 60-day window. The court sided with the insurer, stressing the importance of strict policy compliance.

Lesson: Always report slow-paying buyers promptly. Late reporting can void your claim.

📉 Bankruptcy Case: Retail Collapse

In 2020, a Chicago electronics distributor insured its largest customer – a retail chain that later filed Chapter 11. The company recovered 85% of a $1.1M balance through Atradius and avoided workforce cuts.

🛠️ Step-by-Step: How to Get Trade Credit Insurance

Step 1: Evaluate Your Exposure

List top buyers and their credit limits.
Identify what percentage of revenue comes from top 5 clients.
Assess payment term lengths and A/R aging.

Step 2: Contact a Broker or Insurer

Trusted brokers: Marsh, Gallagher, Lockton
Direct insurers: Allianz Trade (Euler Hermes), Coface, Atradius, QBE, EXIM Bank

Step 3: Provide Underwriting Info

Sales history
Buyer list with outstanding balances
Credit and payment records
Claims history (if any)

Step 4: Review and Compare Policy Options

Coverage limits per buyer and per event
Deductibles or co-insurance percentages
Reporting requirements (monthly/quarterly)
Premiums (often 0.1–0.6% of covered turnover)

Step 5: Sign Policy and Integrate Into Credit Processes

Monitor buyers per insurer guidelines
Submit monthly sales reports
Follow rules for reporting late payments
File claims properly if default occurs

🌐 Major Trade Credit Insurance Providers in the U.S.

Provider	Focus Area	Website / Contact Info
Euler Hermes / Allianz Trade	Global coverage, strong analytics	allianz-trade.com
Coface North America	Domestic & global mid-market	coface-usa.com
Atradius USA	Flexible SME options	atradius.us
QBE North America	Custom risk-sharing programs	qbe.com/us
EXIM Bank	Political risk & export support	exim.gov

✅ Final Thoughts

Trade Credit Insurance is not just for protection – it’s a strategic growth tool. From stabilizing your receivables to unlocking better financing and expanding global reach, TCI delivers value across your business.

In an era where supply chain volatility, bankruptcies, and geopolitical risk are rising, having a TCI policy could mean the difference between a major setback and continued growth.