Which insurance product covers losses when customers fail to pay their commercial invoices?

Trade credit insurance covers a business against losses when customers fail to pay commercial invoices.

It is commonly used for sales made on credit, where a supplier delivers goods or services before receiving payment. Depending on the policy, protection may apply to customer insolvency, prolonged default, or certain political and commercial risks that prevent payment.

Insurers generally assess the creditworthiness of buyers, set limits for individual customers, and monitor payment behavior. If a covered buyer defaults, the policy can reimburse an agreed portion of the unpaid receivable after the required waiting period and claim process.

Trade credit insurance is different from consumer credit protection and mortgage insurance. It can also help a company obtain financing because insured receivables may be viewed as more secure by lenders.