Trade Credit Insurance for firms selling on credit terms
Protects the money your business customers owe you, paying out if a buyer becomes insolvent or simply does not pay. Cover suits manufacturers, distributors, exporters and other firms selling on account, and a specialist broker can compare the options.
- Unpaid invoices covered if a customer becomes insolvent
- Credit limits and monitoring on the buyers you trade with
- Cover for UK and export sales, including political risks
Reviewed October 2026 by the MyBusinessComparison.com editorial team
What is trade credit insurance?
Trade credit insurance protects a business against customers who fail to pay for goods or services bought on credit. If an insured buyer becomes insolvent, or leaves an invoice unpaid beyond an agreed period, the policy pays an agreed share of the debt, so a single bad debt does not wreck cash flow.
The insurer sets a credit limit on each customer you want covered, watches those customers' finances and warns you when risk rises. That information is often as valuable as the cover itself, because it helps your credit team decide who to trade with and on what terms.
Policies cover business to business sales only. They can be written for your whole sales ledger, for a handful of large accounts or for export customers alone.
Trade credit insurance at a glance
- Protects
- Business to business invoices on credit terms
- Pays out on
- Buyer insolvency, protracted default and, for exports, political events
- How much is paid
- An agreed share of each insured debt, after any excess
- Key feature
- A credit limit set by the insurer for each buyer
- Main types
- Whole turnover, key account and single buyer policies
- Often required by
- Banks and invoice finance providers
What does trade credit insurance cover?
The core cover is non-payment by insured buyers. Around it, most policies offer services and options that help you avoid the loss in the first place.
Customer insolvency
Unpaid invoices when an insured buyer enters administration, liquidation or another formal insolvency process.
Protracted default
Debts that remain unpaid for a set period after the due date, even though the buyer has not formally failed. You do not have to wait for an insolvency to claim.
Political risk on exports
Non-payment caused by events in the buyer's country, such as war, import bans or restrictions on moving money abroad.
Credit limits on each buyer
The insurer assesses your customers and sets a limit for each, which is the most it will pay on that account. Limits can be raised, reduced or withdrawn as the buyer's finances change.
Discretionary limits
Many policies let you set limits on smaller accounts yourself, using credit reports or payment history, up to a figure agreed with the insurer.
Buyer monitoring
Ongoing tracking of insured customers, with alerts when filings, payment behaviour or court actions point to trouble.
Debt collection
Help recovering overdue accounts, often included or offered at agreed rates, which can head off a claim altogether.
Read more about commercial legal expenses insurance
Pre delivery cover
For goods made to order, cover for costs already spent if the buyer fails before the goods are delivered.
Read more about insurance for manufacturers
Key account and top up cover
Cover for a single large customer, or extra limit above what a whole turnover policy will provide.
Covers that protect other parts of the balance sheet
- Crime and fidelity insurance: for losses from employee fraud, fake supplier invoices and payment diversion
- Directors' and officers' insurance: for claims against directors, including those made after an insolvency
- Goods in transit: for stock damaged or stolen on its way to your customers
- Product recall insurance: for the costs of recalling goods that customers may otherwise refuse to pay for
Which businesses use trade credit insurance?
Firms that sell to other businesses on credit terms, especially where a few large customers account for a big share of sales or margins are thin.
Exporting goods as well? Cargo risks are separate. See marine cargo insurance for goods shipped overseas.
- Manufacturers: selling to distributors, retailers and other manufacturers on monthly terms
- Wholesalers and distributors: with large ledgers, tight margins and customers in many sectors
- Builders merchants: giving trade accounts to contractors, a sector where insolvencies hit suppliers hard
- Construction suppliers and subcontractors: owed money by main contractors on long payment cycles
- Engineering firms: supplying components to larger groups and carrying pre delivery costs on bespoke orders
- Food and drink producers: selling to retailers, wholesalers and hospitality groups where one failure can be costly
- Recruitment agencies: paying temporary workers weekly while clients pay on longer terms
- Haulage and logistics firms: invoicing shippers and freight forwarders after the work is done
- Technology resellers: supplying hardware and licences to business customers on account
- Exporters: selling into overseas markets where checking a buyer is harder and political risk is real
- Agricultural merchants and producers: selling crops, feed and inputs on credit across the season
- Security and facilities contractors: invoicing clients monthly for manned guarding, cleaning and site services
How much does trade credit insurance cost?
Premiums are usually based on insured turnover, with the rate set by how risky your customers are and how well you manage credit.
Insurable turnover
The value of credit sales you insure, often declared through the year and adjusted at the end.
Quality of your buyers
Insurers look at the financial strength of each customer and the spread of risk across your ledger.
Sectors and countries
Selling into sectors with high insolvency rates, or to countries with political or transfer risk, costs more.
Credit terms
Longer payment terms keep money at risk for longer and raise the rate.
Bad debt history
Insurers study recent bad debts, the reasons behind them and how your credit control has tightened since.
Excess and share retained
Taking a larger first loss, or keeping a bigger share of each debt yourself, lowers the premium.
What trade credit insurance does not cover
Most declined claims come from policy conditions rather than exclusions, so read both carefully.
- Debts on customers with no credit limit, or above the limit in force when the goods were delivered
- Invoices the customer disputes, until the dispute is settled in your favour
- Sales to consumers, associated companies or public bodies, unless agreed
- Debts that were already overdue or doubtful when cover started
- Deliveries made after you knew the buyer was in difficulty, or after a limit was withdrawn
- Claims where overdue accounts were not reported within the time the policy allows
- Losses from fraud by your own staff, which need crime and fidelity cover
Trade credit insurance or invoice finance?
Finance directors often weigh the two together. They solve different problems and often work side by side.
| Feature | Trade credit insurance | Invoice finance |
|---|---|---|
| Main job | Protects against customers not paying | Releases cash tied up in unpaid invoices |
| Effect on cash flow | Pays out only when a debt is lost | Advances money soon after invoicing |
| Who carries bad debt risk | The insurer, for an agreed share | Usually you, unless the facility is without recourse |
| Credit checking | Insurer sets and monitors buyer limits | Provider checks debtors for funding |
| Working together | A policy can support a larger finance facility | Some lenders ask for credit insurance |
How to arrange trade credit insurance
Insurers decide on cover buyer by buyer, so the more detail you give, the better the limits.
Pull your sales ledger
An aged debtor report, your largest customers and their balances are the starting point.
Set out your credit terms
Standard and longest payment terms, how you vet new customers and how you chase late payers.
Share your loss history
Bad debts over recent years, with what happened and what you changed.
Choose the policy type
Whole turnover for broad protection, or key account cover for a few large customers.
Compare limits as well as price
Check the limits offered on your key buyers, the share of each debt paid and the reporting conditions.
Protect your receivables
Tell us about your turnover, customers and credit terms and a specialist broker will look at the options.
Compare quotesTrade credit insurance FAQs
How much does trade credit insurance cost?
The premium is usually a rate applied to the turnover you insure. That rate depends on your customers' financial strength, the sectors and countries you sell to, your credit terms and your bad debt history. Choosing a larger excess lowers the cost.
Does trade credit insurance pay the whole invoice?
Not usually. Policies pay an agreed share of each insured debt, with your business keeping the rest, so you stay involved in managing credit. The share is set when the policy is arranged and applies after any excess or first loss.
What happens if the insurer reduces a customer's credit limit?
Deliveries made before the change usually stay covered under the old limit. Anything you supply after the reduction is only covered up to the new figure, so many firms tighten terms or ask for payment up front.
Can I insure just one or two big customers?
Yes. Key account or single buyer policies cover selected customers rather than the whole ledger. They suit firms with one dominant customer, though insurers may expect that customer to be financially sound.
Does trade credit insurance cover export sales?
Yes. Policies can include overseas buyers, with optional cover for political risks such as import bans, war or currency transfer restrictions. Limits on buyers in some countries may be harder to obtain.
Do I have to wait for a customer to go bust to claim?
No. Most policies include protracted default, so you can claim once an invoice stays unpaid for the waiting period set in the policy, even if the buyer is still trading.
Will trade credit insurance help me get finance?
It often does. Banks and invoice finance providers may lend more against insured receivables, and some require a policy. The lender can be named on the policy so claim payments go to them.
Are disputed invoices covered?
Not while the dispute is live. If a customer refuses to pay because they say the goods or work were faulty, the insurer usually waits until the dispute is resolved before paying the claim.
How do I get a trade credit insurance quote?
Request one from this page and a specialist broker will follow up with you. An aged debtor report, annual credit turnover, your payment terms and a note of recent bad debts let the broker present your ledger to insurers quickly.
Get paid, even when a customer cannot pay
Protect UK and export receivables with trade credit insurance compared by a specialist broker.