Book contents
- Frontmatter
- Contents
- Foreword
- Introduction
- Disclaimer
- Chapter 1 What is trade?
- Chapter 2 What is trade credit insurance?
- Chapter 3 Product types
- Chapter 4 Risk types
- Chapter 5 Typical set-up of a trade credit insurance contract
- Chapter 6 Premium, the price for cover
- Chapter 7 Day-to-day policy management
- Chapter 8 Buyer risk underwriting in trade credit insurance
- Chapter 9 Debt collection
- Chapter 10 Imminent loss and indemnification
- Chapter 11 Renewal, expiry, termination of a policy
- Chapter 12 Single risk business
- Chapter 13 The single risk insurance market: Private and public players
- Chapter 14 Reinsurance of Trade Credit Insurance
- Trade Credit Insurance resources
- Glossary of trade credit terminology
Chapter 5 - Typical set-up of a trade credit insurance contract
Published online by Cambridge University Press: 18 January 2018
- Frontmatter
- Contents
- Foreword
- Introduction
- Disclaimer
- Chapter 1 What is trade?
- Chapter 2 What is trade credit insurance?
- Chapter 3 Product types
- Chapter 4 Risk types
- Chapter 5 Typical set-up of a trade credit insurance contract
- Chapter 6 Premium, the price for cover
- Chapter 7 Day-to-day policy management
- Chapter 8 Buyer risk underwriting in trade credit insurance
- Chapter 9 Debt collection
- Chapter 10 Imminent loss and indemnification
- Chapter 11 Renewal, expiry, termination of a policy
- Chapter 12 Single risk business
- Chapter 13 The single risk insurance market: Private and public players
- Chapter 14 Reinsurance of Trade Credit Insurance
- Trade Credit Insurance resources
- Glossary of trade credit terminology
Summary
The traditional whole turnover credit insurance contract typically takes the form of an umbrella policy, which contains a framework of terms and conditions under which individual amounts of cover (credit limits on the customer's buyers) are agreed during the lifetime of the policy.
The actual set-up and appearance may differ per credit insurer, but broadly speaking the credit insurance policy has the following parts and contents.
SCHEDULE
This contains details of the policyholder and of the individual policy, such as
• policy number;
• name and address of policyholder and of other parties to the policy (e.g. broker or trade financier);
• actual premium rate or amount and/or the minimum premium amount;
• start and end date of the policy (policy period);
• description of the insured's trade activities;
• covered percentage and amounts of deductibles, if any;
• the longest credit period that the insured may agree with its buyers under cover of the policy;
• the maximum amount that the insurer is liable to in respect of all losses during the policy period;
• specification of the costs that will be charged for credit limit handling and monitoring of the buyers;
• overview of buyer countries covered by the policy including any special terms and conditions for particular buyer countries;
• currency of the insurance contract;
• the applicable law and competent court.
GENERAL TERMS AND CONDITIONS
This part contains generally applicable policy wording describing the insurer's commitment, what is covered and what not and the rules of conduct, duties and obligations of the policyholder required for coverage. It covers subject such as:
• description of the covered causes of loss (insolvency, protracted default, political risks);
• description of the insured receivables or trade;
• exclusions (which causes of loss, which buyers, which receivables are not covered);
• when cover for each receivable starts (typically for credit risk cover, when the corresponding delivery is made or when the service is performed);
• credit limits: how and when to apply or establish for a credit limit for each buyer, how long are they valid, any discretionary limits that may be set by the policyholders themselves, the right of the credit insurers to change credit limit amount;
- Type
- Chapter
- Information
- A Guide to Trade Credit Insurance , pp. 37 - 40Publisher: Anthem PressPrint publication year: 2015