9 Things That You Should Know About Credit Insurance

Written by on January 23, 2013 in Money - No comments | Print this page

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credit-insuranceOne of the most common complaints that I hear regarding credit insurance is that it is very hard to convince insurers to issue compensations for unpaid debts.

However, only a few people understand why insurance companies do not issue coverage for some, while others get full compensation from their credit insurance.

Things That You Should Know About Credit Insurance

  • I will remind you that in order to get coverage, you need to make sure that the legal entity that your company is invoicing, is on par with the legal entity placing the orders with your company.  If they do not match with each other, the insurance company will never issue compensation.
  • You must always remember that the insurance company the amount of money that the company will release depends on your debt limit (usually lesser). Therefore, if you have exceeded your credit limit, you need to talk to your insurer and ask for an increase in order to get the compensation that you need.
  • If your debtor is unable to pay for their debts because of certain reasons, such as death and insolvency, your insurer must compensate for the unpaid debts, since this is the main purpose of credit insurance, which is to protect your account receivables.
  • You need to make sure that you have issued invoices on the entity that owes you money, especially to those that have made an order with your company. This will help you prove the credibility of your risk assessment.
  • You must be familiar of the different time frames used for claim lodgments. Attradius is within 6 months of the date of loss. QBE is within 6 months of protracted default or insolvency. Coface is within 30 days of the expiration of your maximum credit period. An understanding of these terms will help you prepare the documents that you need when making an insurance company.
  • To avoid any conflicts you need to make sure that you have added associate companies in your policy as joint insured.
  • You must always make sure that your debtors will not exceed the endorsed limit of your policy. If the amount of debts is over the limit, the insurance company will never issue coverage for the amount that have exceeded.
  • The insurance company will never cover outstanding debts that are beyond the maximum credit extension/period allowed. However, you still need to report these overdue debts to maintain accuracy with your report.
  •  You should always contact your insurance company for queries. It is very important to understand everything about the terms and conditions of your insurance policy. In this way, you will know what to do and what to expect when you need to ask for compensation for the unpaid debts of your debtors.

In my opinion, it is not that hard to get compensation from your credit insurance policy, as long as you understand the things is involved in insurance claims. Once you understand these things, you will be able to determine what you should do next.

This is a guest post.  The author writes on various topics and has good knowledge about Atradius trade credit insurance. To know more about it, write to him.

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

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