How Much Does Trade Credit Insurance Really Cost
The first question often asked about trade credit insurance is “how much does it cost?”
Trade credit insurance safeguards your business against non-payment by customers, ensuring your cash flow remains stable. By insuring your accounts receivable, you can operate with greater confidence, knowing that your cash flow won’t be disrupted if customers fail to pay.
Despite its benefits, many businesses shy away from trade credit insurance due to the misconception that it’s too costly or unaffordable.
Right now, you’re looking at a starting point of around $8,000 for our product. But what makes the price go up? Here are a few things to keep in mind:
- Industry Risk: Some industries, like construction, are riskier than others. If you’re in a high-risk field, expect to pay a bit more because insurers need to offset that risk.
- Loss History: Insurers look at your loss history from the past three years. If you’ve had some significant losses, that can raise your premium since it suggests a higher chance of future claims.
- Quality of Buyers: The more your insurers know about your buyers—and the stronger their profiles—the better! Reliable buyers can help keep your costs down.
- How much cover you need: If you have big buyers with high exposure (think millions), that can impact your premium too. On the flip side, buyers with lower exposures (like $1M to $2M or less) usually won’t affect your rates as much.
Understanding these factors is what we do and negotiate policy structures accordingly. The value trade credit insurance provides almost always outweighs the cost of the premiums, and the peace of mind knowing that a customer’s non-payment won’t impact your bottom line is invaluable.
Considering this, the cost of trade credit insurance might be more affordable than you expect.
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