Credit insurance

What is credit insurance?

Credit insurance gives you more certainty that your invoices get paid. You will not be at risk if your customer goes bankrupt or applies for suspension of payments. The insurer then pays the invoices. Credit insurance is sometimes also called debtor insurance. A debtor is a customer who has yet to pay.

Who can benefit from credit insurance?

Anyone who delivers goods or services on debit account to business customers. Good debtor management ensures that you receive your money. You can also outsource debtor management, for example to an insurer.

How does credit insurance work?

You pay a premium based on your turnover. If your customer is unable to pay, the insurance company will pay you. It takes over the claim for payment, and will try to get the money from the client. You can only take out credit insurance if deliver to business customers.

Different types of credit insurance

There are different types of insurance. Which type is best for you depends on several factors. For example, the size of your company, how you do business, and how many deliveries you do on debit account.

• Insurance per transaction: if you occasionally send high invoices.
• Insurance per debtor: if you have a customer who may not be able to pay your invoices.
• Credit insurance per country: if you mainly do business with customers from one or a few countries.
• Turnover insurance: this insures your entire turnover against non-paying customers.
• Export credit insurance: for customers abroad.

How much does credit insurance cost?

Your insurance premium depends on the type of insurance you choose. Insurance companies determine the premium based on:

• turnover volume (price per product times number of products sold)
• the number of debtors (risk-spreading)
• the cover percentage for claims (often between 75 and 85%)
• your debtors’ country of residence
• the risk profile of your debtors
• the amount of deductible excess: how much of the damage you have to pay for yourself?

What does credit insurance cover?

You are insured if a customer fails to pay an invoice due to financial difficulties. Some credit insurances only apply to customers in the Netherlands. But you can also take out an insuance in case your customers are located abroad. You are then also insured if a customer is unable to pay due to political unrest, war, or natural disasters.

What does credit insurance not cover?

Usually, credit insurance does not cover:

• ill-intent: your customer is able to pay, but fails to do so
• if your client is a consumer, a private individual

Your obligations

Adequate debtor management is often a condition for insurance companies to sell you credit insurance. You must do everything in your power to receive payment for your deliveries. These are some of the obligations insurance companies often impose:

• You must agree upon good terms and conditions for delivery and payment with your customers.
• You must include a retention of title clause in the agreement with your customer. This means that you remain the owner of the goods until the invoice has been paid.
• If your customer fails to pay on time, you must send reminders.
• You have to inform your insurance company directly when a customer fails to pay on time.

Where can you get credit insurance?

Some sector organisations offer credit insurance to their members. Banks often offer credit insurance as part of a wider range of financial products. And there are many insurance companies you can turn to.

Export credit insurance

In some cases you can take out export credit insurance offered by the Dutch government if your company exports products or services. Export credit insurance ensures you will get your money, even if your foreign customer does not pay. This insurance comes with conditions.