Trade Credit Insurance Setup Checklist

Before you start

Trade credit insurance pays out if a covered customer fails to pay due to insolvency or protracted default. It can protect a business that carries large or concentrated receivables, but it comes with conditions you must keep meeting. This is general information; weigh it with a broker and your accountant.

• A clear picture of your receivables and your biggest customer exposures.
• Your bad-debt history and how a major default would hit you.
• A broker or insurer who handles trade credit cover.
• Your existing credit-control process, which insurers will expect to see.

Step 1 — Assess the need

1. Map your receivables and identify customers whose default would seriously hurt you.
2. Quantify concentration — how much credit sits with a handful of accounts.
3. Compare the likely premium against the loss you are protecting against.
4. Consider whether your sector or customers carry elevated insolvency risk.
5. Decide whether whole-of-turnover or selective cover fits your situation.

Step 2 — Understand the cover

1. Check what triggers a claim — typically insolvency and protracted non-payment.
2. Read the exclusions carefully; disputes and certain debts are often not covered.
3. Confirm the indemnity percentage — policies usually cover most, not all, of the loss.
4. Understand the credit limits the insurer sets per customer and how to get them increased.
5. Note the excess and any aggregate limits on total payouts.

Step 3 — Set up and comply

1. Provide accurate information about your customers and trading history when applying.
2. Operate within the insurer-approved credit limits for each customer.
3. Follow the required credit-control steps and reporting deadlines.
4. Report overdue accounts and potential losses within the policy timeframes.
5. Keep documentation so any claim is supported by evidence.

Common mistakes

• Assuming everything is covered and ignoring the exclusions.
• Trading above the insurer's approved limit, voiding cover on the excess.
• Missing the deadline to notify an overdue account or a loss.
• Letting credit control slip, breaching a condition of the policy.
• Treating insurance as a reason to stop checking customers properly.

Insurance complements good credit control — it does not replace it. If a default occurs, a free debt appraisal can run alongside any claim to pursue recovery. This is general information, not financial advice — discuss cover with a licensed broker.