Trade Credit Insurance for Accounts Receivable
For many businesses, accounts receivable is the largest asset on the balance sheet, and one large customer’s bankruptcy can wipe out a year of profit. Trade credit insurance protects your receivables when customers can’t or don’t pay, helps you extend credit with confidence, and can strengthen your borrowing base.
Reviewed by Nate Feuerman, High Net Worth Insurance Producer at Stonebrook
Last updated
Quick answers
What is trade credit insurance?
Insurance that pays you when a customer fails to pay a covered invoice because of insolvency, bankruptcy or prolonged nonpayment.
Can I insure just my biggest accounts?
Yes. Key account policies cover selected large customers instead of your whole portfolio.
Does it cover foreign customers?
Yes. Export credit coverage can include political risks, like currency restrictions or government action, that stop payment.
Can it help with financing?
Often. Lenders may lend more against insured receivables.
How trade credit insurance works.
Customer insolvency
Pays a covered loss when a customer goes bankrupt or becomes insolvent.
Protracted default
Pays when a solvent customer simply doesn’t pay within a set period after the due date.
Credit limits
The insurer reviews your customers and sets a covered credit limit for each one.
Political risk
For export sales, covers nonpayment caused by events like currency transfer restrictions or war.
Coinsurance share
You typically keep a small percentage of each loss, and the policy pays the rest.
Credit monitoring
Insurers watch your customers’ financial health and warn you of deteriorating risk.
Which kind of trade credit policy fits?
| Policy type | What it covers | Best for |
|---|---|---|
| Whole turnover | All or most of your credit sales | Businesses with many customers that want broad protection |
| Key account | Selected large customers | Businesses where a few accounts make up much of revenue |
| Single buyer | One customer or one large contract | A concentration you can’t afford to lose |
| Export credit | Foreign customers, including political risk | Companies selling internationally |
What underwriters will ask for.
- Your accounts receivable aging.Current balances by customer and days outstanding.
- Your largest customers.Names, credit terms and sales volume for each.
- Your bad debt history.Losses over the past several years.
- Your credit practices.How you approve customers, set limits and collect.
More than protection against bad debt.
Trade credit insurance lets you offer competitive terms to new and larger customers without carrying the full risk yourself.
Because insured receivables are more secure, many lenders will advance more against them, which can improve working capital.
It works alongside your property and business income coverage, which protect against physical losses, not customers who don’t pay.
A broker who knows your business.
Stonebrook is an independent agency. We work with standard, specialty and excess and surplus lines carriers, so we can shop trade credit across specialist insurers instead of fitting you into one company’s program.
Since 1982 we have placed commercial programs for businesses and property owners across the country. We read the fine print, flag the exclusions that matter for your operation, and advocate for you at underwriting, at renewal and at claim time.
Coverage that works together.
Most families need more than one policy. Here is how the pieces fit.
Trade credit insurance questions, answered.
What is trade credit insurance?
Trade credit insurance protects your accounts receivable against nonpayment by customers due to insolvency, bankruptcy or protracted default, and for export sales, certain political risks.
Can I insure only my largest customers?
Yes. A key account or single buyer policy covers selected large customers instead of every account, which suits businesses with concentrated revenue.
How much of a loss does trade credit insurance pay?
Most policies pay a large majority of a covered loss, with you keeping a small coinsurance share. The exact percentage depends on the policy.
What is protracted default?
Nonpayment by a customer that is not formally insolvent, after a set waiting period past the due date. Many trade credit policies cover it.
Can trade credit insurance help me get financing?
Often, yes. Lenders may advance more against insured receivables, and some require it for asset-based lending.
Does trade credit insurance cover disputes over quality or delivery?
Generally not until the dispute is resolved in your favor. It covers inability or failure to pay, not disagreements about what is owed.
Let’s protect the money your customers owe you.
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