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Trade Credit Insurance

Construction Materials and Engineering
From India
To Thailand
188 views / 0 experts
Nov 11, 2022

What risks does Trade Credit Insurance cover?

1 answer

Nov 11, 2022

Trade credit insurance typically covers two types of risks:

1. Commercial risk:

This refers to the failure of a buyer to clear the outstanding amount/ invoice due to financial reasons such as bankruptcy, insolvency, protracted default, and more.

2. Political risk:

This refers to non-payment by the buyer due to external events beyond the control of both parties. It could include geopolitical disturbances like war, terrorist attacks, riots, or natural disasters. This risk also covers any action undertaken by the local government, such as import-export restrictions, license cancellation, currency shortage, or any other economic limitations. Political risks are valid only in the case of international buyers.

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