Credit insurance

Credit insurance is a term used to describe both business credit insurance (a.k.a. trade credit insurance) and consumer credit insurance, e.g., credit life insurance, credit disability insurance (a.k.a. credit accident and health insurance), and credit unemployment insurance,
The easy way to differentiate between these two types of insurance is:

• Business credit insurance is credit insurance that businesses purchase to insure payment of credit extended by the business (their accounts receivable).
• Consumer credit insurance is credit insurance that consumers purchase to insure payment of credit extended to the consumer (insurance pays lender or finance company).

Consumer credit insurance is a way for consumers to insure repayment of loans even if the borrower dies, becomes disabled, or loses a job. Consumer credit insurance can be purchased to insure all kinds of consumer loans including auto loans, credit card debt, loans from finance companies, and home mortgage borrowing. Although purchased by the consumer/borrower, the benefit payment goes to the company financing the purchase for extending the credit to the consumer.
Credit insurance or trade credit insurance (also known as business credit insurance) is an insurance policy and risk management product that covers the payment risk resulting from the delivery of goods or services. Trade credit insurance usually covers a portfolio of buyers and pays an agreed percentage of an invoice or receivable that remains unpaid as a result of protracted default, insolvency or bankruptcy. Trade credit insurance is purchased by business entities to insure their accounts receivable from loss due to the insolvency of the debtors. This product is not available to individuals.
The costs (called a "premium") for this are usually charged monthly, and are calculated as a percentage of sales of that month or as a percentage of all outstanding receivables.
Trade credit insurance insures the payment risk of companies, not of individuals. Policy holders require a credit limit on each of their buyers for the sales to that buyer to be insured. The premium rate is usually low and reflects the average credit risk of the insured portfolio of buyers.
In addition, credit insurance can also cover single transactions or trade with only one buyer.

History Of Credit insurance

Liability insurance is a very broad superset that covers legal claims against the insured. Many types of insurance include an aspect of liability coverage. For example, a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property; automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives, health, or property. The protection offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies typically cover only the negligence of the insured, and will not apply to results of wilful or intentional acts by the insured.

• Public liability insurance covers a business or organization against claims should its operations injure a member of the public or damage their property in some way.
• Directors and officers liability insurance (D&O) protects an organization (usually a corporation) from costs associated with litigation resulting from errors made by directors and officers for which they are liable.
• Environmental liability insurance protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of pollutants.
• Errors and omissions insurance is business liability insurance for professionals such as insurance agents, real estate agents and brokers, architects, third-party administrators (TPAs) and other business professionals.
• Prize indemnity insurance protects the insured from giving away a large prize at a specific event. Examples would include offering prizes to contestants who can make a half-court shot at a basketball game, or a hole-in-one at a golf tournament.
• Professional liability insurance, also called professional indemnity insurance (PI), protects insured professionals such as architectural corporations and medical practitioners against potential negligence claims made by their patients/clients. Professional liability insurance may take on different names depending on the profession. For example, professional liability insurance in reference to the medical profession may be called medical malpractice insurance

Brokerage service providers

Credit insurance can be acquired through Brokers or directly through the insurer. Brokers mainly help in creating market competition between different insurers for better premium pricing and policy wordings for policy holders. Brokers also help policy holders to comply with the policy wordings in order to ensure smooth claiming process, if any.