Trade Credit Insurance: The Complete Guide
By Jeramie Maxwell, President, Impello Global · Ex-Im Bank Platinum Broker · Last reviewed July 2026
Trade credit insurance protects one of the largest and least-protected assets on your balance sheet: the money your customers owe you. If a buyer fails to pay — through insolvency, prolonged default, or political events outside their control — the policy indemnifies the loss, so a single unpaid invoice never becomes a threat to the business.
This guide explains what trade credit insurance is, how a policy actually works, what it does and doesn't cover, what it costs, and how to put coverage in place. If you sell to other businesses on payment terms — domestically or for export — this is the coverage that lets you grow those sales without carrying the full risk of non-payment yourself.
What is trade credit insurance?
Trade credit insurance is a commercial insurance policy that reimburses you when a business customer doesn't pay what they owe. It is also called accounts receivable insurance, credit insurance, or export credit insurance when the buyers are overseas — the same core product under different names.
Most business-to-business sales happen on open account: you deliver the goods or services and invoice the customer, who pays 30, 60, or 90 days later. Until that invoice is paid, you are effectively extending credit — acting as your customer's lender. Trade credit insurance protects that credit. It covers two broad causes of non-payment: commercial risk (a customer becomes insolvent or simply fails to pay within the agreed terms) and, where added, political risk (non-payment caused by events beyond the buyer's control, such as currency controls, government action, or conflict).
How a policy works
A trade credit insurance policy has a few moving parts. Understanding them makes the rest of the coverage straightforward.
1. What you insure. You can insure your whole book of sales (whole-turnover), only your largest accounts (key accounts), or a single significant customer (single-buyer). Broader coverage generally means better pricing and cleaner protection, because the risk is spread across many buyers.
2. Credit limits per buyer. For each customer you want covered, the insurer sets a credit limit — the maximum amount of your exposure to that buyer that is insured at any one time. The insurer underwrites each buyer using financial data and payment behavior most individual sellers never see, giving you a second, expert opinion on your customers' creditworthiness.
3. Premium. You pay a premium calculated as a small percentage of your insured sales — typically a fraction of one percent. Because it scales with sales, the cost tracks the size of the risk you're carrying. (See what trade credit insurance costs.)
4. Claims and indemnity. If a covered buyer doesn't pay, you file a claim after the policy's waiting period, and the insurer pays the indemnity — usually 85% to 95% of the covered loss. You continue your normal credit management throughout; the insurer supports collections and, on political-risk claims, handles the recovery.
What it covers — and what it doesn't
Covered: customer insolvency; protracted default (a covered buyer simply doesn't pay within the agreed period); and, when political risk cover is added, non-payment from currency inconvertibility, expropriation, import/export restrictions, or political violence.
Not covered: amounts above an approved credit limit; invoices already overdue when the policy incepts; losses arising from a genuine commercial dispute over the goods or service (those must be resolved first); and sales to buyers the insurer has declined to cover. None of these are surprises — a good broker structures the policy so the exclusions match how you actually sell.
Why businesses use it
- Sell more, safely. Offer competitive open-account terms and take on new or larger customers without betting the business on any one of them paying.
- Better financing. Insured receivables are stronger collateral. Lenders will often advance more, at better rates, against a book of receivables that is insured — frequently offsetting the premium entirely.
- Early-warning intelligence. The insurer monitors your buyers continuously and flags deterioration before it becomes a loss, giving you time to adjust terms.
- Protection against catastrophic loss. The failure of a single major customer can be existential. Coverage turns that shock into a claim.
What it costs
Premiums typically range from about 0.05% to 0.6% of insured sales, with most programs landing near the lower end of that band. The rate depends on your industry, the spread and credit quality of your buyers, your payment and loss history, and the coverage structure. For worked examples and how to calculate return on investment, see our guide to trade credit insurance cost.
How coverage is bought
Trade credit insurance is placed through a specialist broker, not bought off a shelf. The broker profiles your receivables, takes your risk to the relevant carriers, negotiates terms and limits, and manages the policy through its life. We walk through the full process in how trade credit insurance is actually bought. You can also download our trade credit insurance overview (PDF) for a printable summary.
Choosing a carrier
The market is led by a handful of specialist insurers — Allianz Trade, Coface, Atradius — alongside AIG, Chubb, and others, each with different appetites by industry, geography, and buyer profile. The right carrier for your book is rarely obvious from the outside, which is where an independent broker matters: because Impello isn't owned by any carrier, we place your risk across the whole market for the best terms. See our comparison of trade credit insurance carriers.
Related coverage: Accounts receivable insurance · Political risk insurance · Ex-Im Bank & export credit insurance
Frequently asked questions
Is trade credit insurance the same as accounts receivable insurance? Yes. "Accounts receivable insurance," "credit insurance," and "trade credit insurance" all refer to the same product — coverage against a business customer's failure to pay. "Export credit insurance" is the same coverage applied to overseas sales.
How much does trade credit insurance cost? Premiums typically run 0.05%–0.6% of insured sales, with most programs near the lower end. Pricing reflects your industry, buyer mix, and loss history.
What does trade credit insurance actually cover? Non-payment due to customer insolvency and protracted default, plus — when added — political risks such as currency inconvertibility and expropriation. It does not cover commercial disputes, pre-existing overdue invoices, or exposure above an approved limit.
Who needs trade credit insurance? Any business that sells to other businesses on payment terms and would feel the loss if a major customer didn't pay — exporters, manufacturers, distributors, wholesalers, and commodity traders in particular.
Does it cover political risk? It can. Commercial cover handles insolvency and default; adding political risk cover extends protection to government action, currency controls, and conflict.
Can I insure just one customer? Yes — single-buyer policies cover one significant account. Whole-turnover coverage usually prices better because the risk is spread, but single-buyer is available when that's what you need.
How are claims paid? After the policy's waiting period, you file a claim and the insurer pays the indemnity — typically 85%–95% of the covered loss. You keep managing collections; the insurer supports recovery.
Talk to Impello
If you're weighing trade credit insurance for the first time, or your current program hasn't been reviewed against today's market, we can help. Impello is an independent specialty brokerage and Ex-Im Bank Platinum Broker — we structure and place coverage across the whole market. Schedule a consultation.