By Tahir Abbas, Editor · Last updated 1 November 2026
Trade credit insurance protects businesses that sell on credit: if a customer fails to pay, goes insolvent or pays far too late, the policy covers much of the unpaid invoice. Bad debts are one of the most common reasons otherwise healthy businesses fail, so cover for your receivables is cover for your cash flow.
This guide explains what trade credit insurance typically covers, what it leaves out, who it suits, and how to compare policies before you buy.
What trade credit insurance typically covers
- Unpaid invoices when a customer becomes insolvent
- Protracted default: payment far beyond agreed terms, where covered
- Political risks for export sales, where included
- Credit information and monitoring of your buyers
- Debt collection support, where included
What trade credit insurance typically does not cover
- Disputed invoices where the buyer refuses to pay over quality or delivery
- Sales to buyers not approved under the policy
- Losses from your own failure to deliver or to follow credit procedures
- Currency and market risks, unless specifically covered
Who trade credit insurance is for
Manufacturers, wholesalers, distributors and any business selling goods or services on payment terms, especially exporters and businesses where a few large customers dominate the order book.
How to choose and compare trade credit insurance
- Check the percentage of each invoice covered and the maximum per buyer
- Confirm whether your largest buyers are insurable at the limits you need
- Look at the waiting period before a claim can be made
- Compare the cost against the value of the receivables at risk
Back to Business & Commercial Insurance and Insurance.
Sources and Disclosure
This guide is general information, not financial advice. Plan features described here are general and vary by insurer and state; always read the sample policy before you buy. For the rules governing insurance in your state, see the consumer resources of the National Association of Insurance Commissioners (NAIC). Disclosure: Being Insurance is an independent comparison site. We may earn a commission when you buy through links on this page. That never changes which companies we list or the order we present them in.