Credit Insurance

Abstract

Credit insurance is an important risk mitigant tool but requires careful evaluation. The importance of the proposal form is highlighted and the ability of the insured to comply with the policy terms. The types of insurable risks are described such as commercial, political, third country, pre-delivery, and the operation of ‘risks attaching’ and ‘losses arising’ policies. The alignment of the level of financing to the insured indemnity percentage net of deductibles of excess and aggregate first loss and observation of the insured debtor limits and conditions of cover are discussed. The critical impact that the maximum policy liability can have on the financier is emphasised. Joint insured and loss payee endorsements, calculation of loss, and claim waiting period are also explained.