Credit insurance

What is credit insurance?

Credit insurance gives you more certainty that your invoices will be paid. You will not be at risk if your customer goes bankrupt or applies for suspension of payments. Your invoices will then be paid by the insurer. 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 can benefit from taking out credit insurance. Insurance companies often do more than just pay out claims; they can also help you manage your debtors effectively.

How does credit insurance work?

You pay a percentage of your turnover. If your customer is unable to pay, the insurance company will pay you. It takes over the claim on your client, and will try to get the money from the client. You can only take out credit insurance for 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 receive a large payment from a customer every now and again.
• Insurance per debtor: if you have a customer who regularly pays a large sum.
• Credit insurance per country: if you mainly do business with customers from one or a few countries.
• Turnover insurance: this is the most complete type of credit insurance. If you take out turnover insurance, you insure your entire turnover against non-paying customers.

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 amount of deductible excess (how much of the damage you have to pay for yourself)

What does credit insurance cover?

A credit insurance covers unpaid bills, if your business customers are unable to pay. There are different levels of coverage. You can take out:

• a credit insurance that only insures against non-paying Dutch customers;
• a credit insurance that also covers foreign customers;
• or a credit insurance that covers causes for non-payment like political unrest, war, natural disasters, or shortage of funds.

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
• delivery of goods or services to private individuals

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 put an ownership reserve clause in your sales contract.
• 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.