Trade Credit Insurance: Common Exclusions
Every trade credit insurance policy has exclusions describing what it will and will not pay. Although this post will not attempt to identify them all, it will identify a few of the more common exclusions found in most policies. Some typical exclusions include:
Trade Disputes. Quality, fulfillment, and performance disagreements between a seller and buyer are not covered until a judgment is awarded in favor of the insured. Once a winning judgment is produced to the insurer, the claim qualifies for payment.
Maximum Collection Period. If a buyer has outstanding invoices that are overdue beyond the agreed collection period, only those invoices qualify for payment. Any new invoices from that buyer would not be covered.
Maximum Terms of Sale. A transaction that occurs outside of the normal terms of sale would not qualify for payment. For example, if a buyer requests an exception to the normal collection period indicated in the policy, ie. net 30, net 60, this would not be covered.
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