Credit insurance is designed to protect a business from non-payment of commercial debt. That means that if a customer does not pay because of bankruptcy or insolvency, or if it simply does not pay on time, a credit insurance policy will pay the business up to the insured credit limit.  This coverage helps protect a business’ capital, maintain its cash flow and secure its earnings while extending competitive credit terms and access to more attractive financing.

A credit insurance policy allows a business to feel secure in extending more credit to current customers, or to pursue new, larger customers that would have otherwise seemed too risky, opening the door to increased sales.  

Securing coverage of customer payments made to a business’ accounts receivable represents an important asset to any organization – one that warrants protection. Insurers can provide coverage to help business owners safeguard this critical asset, but need to understand the level of risk by asking such questions as:

• What does the business’ balance sheet look like regarding accounts receivable payments?  
• How many customers does the business serve, and how reliable are payments from those customers? 
• Is the business’ risk spread across multiple customers or concentrated in just a handful? 
• Does the business evaluate its customers’ economic status before extending credit? 

This protection is similar to questions regarding supply chain issues. Is the business diverse enough with its suppliers that it can survive delays in deliveries or financial problems among key suppliers? Directors and officers (D&O) liability insurance is also related, to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization, including ramifications from customer credit- and payment-related issues.

The professionals at Evergreen understand these products and can speak the language of business owners looking for the best package of protection. Contact us to learn more.

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Evergreen Insurance provides these updates for information only, and does not provide legal advice.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.