Trade Credit Insurance (Credit Insurance) Explained
Trade Credit Insurance (TCI), commonly referred to simply as Credit Insurance, is a specialized financial product that protects sellers against the risk of non-payment of commercial debts. It ensures that a company's accounts receivable—the money owed by customers—are protected against loss due to insolvency, bankruptcy, or political risk.
I. The Role and Mechanics of Credit Insurance
1. The Core Risk Covered
Trade credit insurance covers the risk that a buyer will not pay for goods or services purchased on credit terms. This is a crucial distinction from general commercial liability or property insurance.
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