CREDIT FAQs

Why you should buy credit insurance?

As a result of Globalization, there is growth in trading opportunities and companies are faced with increasingly complex needs in terms of trade receivables management. Credit Insurance is a tool that helps the companies to expand business with peace of mind.

Credit Insurance protects companies against customer defaults. It covers the sales of the companies to its buyers on credit against the risk of loss due to the insolvency of their customers.

Credit Insurance plays a vital role in the trading cycle of any company by protecting profit, cash flows, sales growth, the balance sheet, and a company's customer base. It can be of great help in the growth of sales by allowing the secure development of new buyers, new markets and the credit extended to a buyer.

What Risks are covered in the policy?

Covered:

  • Protracted Default or Delayed Payment by the debtors.
  • Insolvency

Not covered:

  • Trade disputes.
  • Non-Acceptance of goods.

Political Risks - 

Covered:

  • Natural disasters like earthquakes, cyclones, floods, etc.
  • Import license cancellation.
  • Protracted Default on State-Owned Entities.
  • Any measure was taken by the country where the buyer is located, preventing payment of a transaction.

Not covered:

  • Devaluation or depreciation of currencies.
  • Protracted Default or Delayed Payment by the debtors.
  • Insolvency.
  • Trade disputes.
  • Non-Acceptance of goods.

How is premium computed?

The premium is calculated as a rate % on the amount of insured turnover (estimated or projected credit sales for the financial year) The policy commences only after the insured or the policyholder applies for credit limit on each buyer (Debtor) and is duly approved by us.

How much is the Credit Limit?

The credit limit is the maximum exposure (outstanding debt) of the insured against that particular buyer at any given point of time.

Indemnity Details

Up to 80% of the insured debt, for both commercial as well as political risks.

Details about Claims

Unlike other insurances, there is a waiting period of 5 months in this policy. The policyholder has the option to grant extensions to the debtor for payment within the maximum credit period specified in the policy without paying any additional charge and without prior approval.

What is the buying procedure?

Presentation/Discussion on credit insurance. Details from the client, of risk coverage desired and completion of Proposal Form. The indicative rates to be given to the client. Policy to be issued after agreement on terms and conditions and collection of premiums.

Note: The sales to subsidiaries, sister concerns, and public sector enterprises not covered. The minimum spread of buyers essential, covering 60% of credit sales.