What are the exclusions in a Trade Credit Insurance Policy?

 

What is a Trade Credit Insurance Policy?

A Trade Credit Insurance Policy also known as an Accounts Receivable Insurance is a type of Insurance Policy which pays the Seller in case the Buyer does not pay for the goods or services that he has received. Apart from the Trade Credit Insurance Coverages, it is important that that Policyholder knows the exclusions in a Trade Credit Insurance Policy in detail.

What are the Exclusions in a Trade Credit Insurance Policy?

The Trade Credit Insurance Company is not liable for any losses arising out of:

-> failure of the Insured to fulfill any of the terms and conditions of the Insured’s Contract with the Counterparty Buyer;

-> failure of the Insured to comply with laws and regulations applicable to the Insured’s Contract with the Counterparty and the laws and regulations of the country

The Trade Credit Insurance Company does not have any liability:

-> For that part of any Commercial credit which relates to interest or penalty for late payment;

-> In respect of the invoice value of goods for which payment for the goods or services is received on or prior to the date the goods are dispatched or services are rendered (that is, no coverage for advance payment);

-> For any losses where the Counterparty is the Insured’s parent company or one of the Insured’s subsidiary, or any other entity where the Insured has a controlling influence in the Counterparty unless the Trade Credit Insurer has agreed otherwise in writing;

-> For any losses where the Credit Limit specified by the Trade Credit Insurance Company for a Counterparty prior to the date the goods are dispatched or services are rendered is Nil;

-> Any loss as a result of willful misconduct by the Insured or critical mistake by the Insured giving rise to the Insured event;

-> any loss relating to the goods dispatched or services rendered to the Counterparty after the Trade Credit Insurer became aware of critical deterioration of the Counterparty’s credit status or Counterparty’s Insolvency;

-> any loss relating to the Small claim Threshold agreement, where the loss is within the Threshold amount for the small claims in each sales invoice;

-> any Loss incurred in relation to a sales transaction through letter of credit

The Trade Credit Insurance Company also has no liability under the Insurance for any loss

-> incurred in relation to the sales transactions in which the goods were shipped from the shipping state to the importing state after the import restriction measures, etc. were taken by the importing state against the shipping;

-> incurred in relation to sales transactions in respect of which the insurance liability of the Trade Credit Insurer has terminated;

-> exceeding the Credit limit provided by the Trade Credit Insurance Company;

-> exceeding the Maximum Liability provided by the Trade Credit Insurance Company;

-> exceeding the Credit Limit for the Specific Counterparty to the Pooling agreement;