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Which Type of Credit Insurance Best Fits Your Company?

Trade credit insurance, primarily used to insure and protect against non-payment of accounts receivable, is a beneficial tool that can increase sales growth, improve borrowing capabilities, and lower a company’s cost of capital - ultimately growing topline revenue and protecting bottom line profits. While trade credit insurance is a great tool to meet business objectives, it is critical that you choose coverage that fits your company’s philosophy and strengths in order to achieve the best results.

There are two types of trade credit insurance: Ground-Up and Excess of Loss. In order to choose the most effective policy for your company, you need to determine your priorities in purchasing trade credit insurance and what you want to accomplish with the policy. You can determine these goals for your company by speaking with a knowledgeable independent broker. Once you have done this, knowing the differences between the two types of coverage can help you decide which direction is best for your company.


Ground-up coverage usually requires a whole-turnover approach meaning that the insured company insures all eligible credit sales. This policy structure typically carries little to no deductible and provides the user with online database driven policy management. Ground-up coverage is beneficial for large companies as well as small companies looking to outsource credit and collection duties.

Excess of Loss

Excess of Loss policy structures typically have larger deductibles and are viewed by the user as a true risk sharing program. This type of coverage is specifically focused on loss retention and balance sheet protection. It can be beneficial for companies with more concentrated risks. When a company seeks excess of loss coverage, it is important to assess their risk management practices and history of bad debt. Insight into these areas will help determine if excess of loss coverage is the right fit.

When determining the best type of credit insurance policy, it is crucial to take into account the company’s historical sales, country or industry concentrations, and prior bad debt losses. What are areas of risk that need to be addressed? Does the portfolio have a diversified spread of risk or is it more concentrated? Does the company need to cover all losses or losses over a particular amount? Answering these questions will help a company understand which provider and structure may be best suited for current needs.

Thanks for sticking with us as we have dove deeper into trade credit insurance. In our next blog in this series, we will discuss what happens once a company purchases trade credit insurance and see the benefits in action.

About Impello Global

Impello Global is a US based trade finance advisory boutique and trade credit and political risk insurance brokerage. We specialize in trade credit and political risk insurance and provide advisory services to companies and lenders who are looking to expand their trade finance capabilities.

If you are a company or a lender trying to better understand trade credit insurance or EXIM Bank programs and looking for guidance about how these programs can help improve working capital financing, our team would be delighted to learn more about your business and discuss options available to you. Please visit our website at or contact us directly at

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