Trade Credit Insurance

Protecting your accounts receivable when a customer can't pay

Trade credit insurance protects a business against the single largest risk hiding on its balance sheet: customers who don't pay. When a company sells goods or services on open-account terms, every unpaid invoice is an extension of credit — and if a major buyer goes bankrupt or simply stops paying, that loss lands directly on the seller. This coverage reimburses the insured portion of receivables that go unpaid due to a covered cause, turning an uncertain exposure into a managed one.

Beyond paying claims, trade credit insurance functions as a credit-management system. Insurers continuously monitor the financial health of a company's buyers, set credit limits on each one, and provide early warning when a customer's risk profile deteriorates — intelligence most businesses could never assemble on their own.

What Trade Credit Insurance Covers

Coverage responds to the causes of non-payment that threaten a seller's receivables:

Commercial Insolvency — Covers unpaid receivables when a buyer becomes legally insolvent or bankrupt.

Protracted Default — Covers a buyer who remains solvent but fails to pay within a defined period after the invoice comes due — the slow non-payment that quietly ties up cash.

Political Risk — Covers export receivables lost to currency inconvertibility, contract frustration, expropriation, import or export license cancellation, or other government action that blocks payment.

Debt Collection Support — Provides the insurer's collection resources and expertise to recover overdue accounts, often before a loss is ever paid.

Insured Percentage — Reimburses an agreed share of each covered loss — typically around 85–95% of the invoice value — after the policy's terms and limits are applied.

How Trade Credit Insurance Works

Policies are generally written on a whole-turnover basis, covering a company's entire portfolio of credit sales, or as single-buyer and key-account policies that protect receivables from one or a few concentrated customers. The insurer assigns a credit limit to each covered buyer, representing the maximum insured exposure on that account, and sets an insured percentage — commonly around 85–95% — that defines how much of a covered loss the policy pays. Many programs also grant a discretionary credit limit, allowing the insured to extend a defined amount of credit to smaller buyers using its own vetting procedures without seeking individual approval. Because receivables backed by this coverage become a far more reliable asset, lenders frequently advance more against an insured accounts-receivable book, improving a company's access to and cost of financing.

Who Needs Trade Credit Insurance

This coverage fits any business that sells to other businesses on credit terms, including:

Manufacturers shipping goods on open account before payment arrives

Wholesalers and distributors carrying large receivables across many accounts

Exporters exposed to both commercial and political non-payment abroad

Any B2B seller with large, concentrated, or growing receivables, or that offers extended payment terms to win business

Why It Matters

For most companies, accounts receivable is the largest asset on the balance sheet — and almost always the largest uninsured one. A single major customer's bankruptcy can erase months of profit and, for a business with concentrated receivables, threaten its very survival even when the rest of the operation is healthy. Trade credit insurance protects the cash flow those receivables represent, strengthens the company's position with lenders, and gives management the confidence to extend credit to new customers and move into new markets without betting the business on each buyer's ability to pay.

Our Approach

At Cory Washington & Co., we treat trade credit as a core balance-sheet exposure, not an afterthought — mapping where a company's receivables are concentrated, structuring whole-turnover or key-account coverage to match how it actually sells, and coordinating related protections for businesses carrying this risk, including wholesale and distribution insurance, political risk insurance for export exposures, and crime insurance where payment fraud is a concern. We align credit limits, insured percentages, and discretionary authority with the way your business grows so the coverage supports expansion rather than restraining it.

Your receivables should be an asset you can count on — so make sure they actually get paid.

All insurance descriptions on this website are provided by Cory Washington & Co. LLC strictly for general informational purposes. They are not intended to be, and should not be relied upon as, legal, financial, or insurance advice. The information presented is general in nature and does not guarantee the availability, terms, conditions, or scope of any insurance coverage. Actual coverage is determined solely by the specific policy language issued by the insurer and remains subject to underwriting approval. Nothing on this website creates or implies an agent-client relationship, binds coverage, or alters any existing policy. Cory Washington & Co. LLC expressly disclaims any liability for actions taken, or not taken, based on the content provided here. For advice regarding your particular situation, please consult directly with a licensed insurance professional at Cory Washington & Co. LLC or another qualified insurance professional, and always review your policy documents in full.

Frequently Asked Questions

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