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Trade credit insurance
Export credit insurance protects a UK exporter against an overseas buyer failing to pay, through insolvency, protracted default or political events outside the buyer's control. Chasing an unpaid debt abroad is slower, costlier and less certain than at home.
Part of: Trade credit insurance
In short
Export credit insurance is trade credit insurance for overseas sales. Private market policies commonly cover buyer insolvency and protracted default, and many add political risks such as currency transfer restrictions, import bans or war. Some also cover costs incurred before delivery if a contract is cancelled. UK Export Finance, the government's export credit agency, offers an Export Insurance Policy covering up to 95% of a contract's value and says it aims to complement the private sector, providing cover where the private market cannot. Most exporters start with the private market.
Policies differ, but the risks fall into two groups:
| Risk | Examples | Commonly covered? |
|---|---|---|
| Buyer insolvency | The overseas buyer enters a local insolvency procedure | Yes, within the credit limit |
| Protracted default | The buyer does not pay an undisputed debt within a waiting period | Yes, within the credit limit |
| Transfer and convertibility | The buyer pays locally but the government stops the currency leaving the country | Often, as political risk |
| Import or export restrictions | A licence is cancelled or an import ban stops delivery | Often, depending on the wording |
| War and civil disturbance | Hostilities prevent payment or performance | Often, with exclusions for some countries |
| Pre-delivery (pre-credit) risk | The contract is cancelled before shipment, leaving you with costs | Sometimes, usually as an add-on |
Political risk is covered in our political risk insurance definition. Loss of or damage to goods in transit is a separate risk, covered by cargo insurance, not credit insurance.
Letters of credit and documentary collections are alternatives for some trades, but they cost buyers money and can make you less competitive. Credit insurance lets you offer open account terms with protection behind them.
UK Export Finance (UKEF) is the UK's export credit agency. Its product guide describes its role as being to "complement, not compete with the private sector", and says it can provide cover even when the private market is not able to offer insurance. The products most relevant to credit risk are:
UKEF also offers free guidance through its Export Finance Managers. Our UK Export Finance entry has a short summary, and surety bonds covers bonding generally.
Most UK exporters buy export cover from the private market, either within a whole turnover policy that includes overseas buyers or as a separate export policy. The mechanics are similar to domestic cover: a credit limit on each buyer, a percentage of each loss insured, overdue reporting deadlines, and a waiting period for protracted default claims.
Insurers also manage their exposure by country. Cover for some countries may be restricted, priced differently or unavailable, and can change at short notice when conditions change. Sanctions can affect whether a policy responds at all, so check how the wording treats them.
Our comparison of whole turnover and single buyer cover explains the policy types, and what happens if a customer goes bust covers the domestic insolvency position.
A UK engineering firm sells a production line to a buyer abroad on 90-day terms. The buyer pays into a local bank, but the central bank then restricts transfers of foreign currency. Four months later the money has not arrived.
Without political risk cover: the firm waits, with no certainty of when the funds will be released.
With a policy including transfer risk: once the waiting period in the wording has passed, the insurer would usually pay the insured percentage, subject to the credit limit and any country conditions. If the contract had been cancelled before shipment, pre-delivery cover, if bought, might have paid the costs already incurred.
For the wider risks of trading internationally, see our importer and exporter insurance guide.
Apex arranges export credit and trade credit insurance, and surety bonds for exporters. A broker reads each enquiry and comes back with options; there is no fee for a quote, and cover is subject to the insurer's acceptance and the policy terms. To quote we need your business activities, turnover, location and bad debt history, plus export sales by country, your main overseas buyers, payment terms and any pre-shipment costs you want covered. Our trade credit insurance guide and export credit insurance definition give more background.
It usually covers non-payment by overseas buyers because of insolvency or protracted default, and often political risks such as currency transfer restrictions, import bans or war. Some policies add pre-delivery cover for costs if a contract is cancelled before shipment. Cover depends on the wording and the countries involved.
Usually not. Most exporters buy cover in the private market. UK Export Finance aims to complement the private sector and can provide cover, including its Export Insurance Policy for up to 95% of a contract's value, when the private market cannot offer insurance.
No. Credit insurance covers the risk of not being paid. Physical loss or damage to goods while they are shipped is covered by cargo or marine insurance, which is a separate policy. Many exporters need both.
It is the risk that events outside the buyer's control stop payment or performance, such as a government blocking currency transfers, cancelling an import licence, or war and civil disturbance. Many export policies include some political risks; the countries and events covered depend on the wording.
Yes, in two ways. Its Bond Support Scheme gives your bank a partial guarantee of up to 80% of a bond's value, which can reduce the collateral the bank asks for. Its Bond Insurance Policy covers unfair calls on bonds and fair calls caused by certain political events.
Tell us what your business does, your turnover and any claims. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.
Start a commercial enquiry Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
