Purchasing Credit Insurance

There are many ways to obtain a Credit Insurance policy, but there is no such thing as a basic Credit Insurance policy. The most important step is getting a policy that is designed specifically for your business.

Type of Provider Benefits
Specialty Broker/Expert selling only Credit Insurance Has access to all Credit Insurance providers and works for you
Insurance Company Sales Agent Works for the insurance company.
Only has access to thier employer's Credit Insurance
General Property & Casualty Broker Generally has access to all Credit Insurance providers


While the ultimate driver for pricing credit insurance is based on assessment of risk, there are a variety of methods to calculate the annual premium. The following are the most common:

  • Sales based pricing
  • Coverage based pricing
  • A/R based pricing
  • Flat rate pricing
  • Policy face pricing

Many insurance carriers will rate the underlying debtors to come up with a financial stress score on the risk of the pool.

Other factors come into play, as well, such as:

  • Utilization of the coverage
  • Terms of sale (the longer the horizon to be paid back, the greater the risk)
  • Country risk
  • Deductibles / Co-insurance
  • Minimum claim amounts

In summary, the industry has moved toward pricing based on sales (basis points), inasmuch as it is a more familiar methodology for the policy holder. Know, however, that it may not be the best solution for you, so ask many questions.

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