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Trade credit insurance
Whole turnover credit insurance covers all or most of your credit sales, while single buyer cover protects the debt owed by one named customer. Which suits you depends on how concentrated your sales are and how you manage credit.
Part of: Trade credit insurance
In short
A whole turnover policy insures your whole debtor book, usually with a credit limit on each buyer and a discretionary limit you can set yourself for smaller accounts. Key account cover insures a chosen group of larger buyers, and single buyer cover insures one. Each pays a percentage of insured losses from insolvency or protracted default, but only where the sale was within a credit limit, the debt was undisputed and overdue accounts were reported on time. Many claim problems come from these conditions rather than from the scope of cover.
Trade credit insurance is the "Credit" class of general insurance in Schedule 1 to the Regulated Activities Order: cover for loss from debtors' insolvency or failure to pay when due. Within that, policies are usually built in one of these ways:
| Policy type | What it covers | Commonly suits |
|---|---|---|
| Whole turnover | All or most credit sales, domestic, export or both | Businesses with a broad spread of customers |
| Key account (top buyers) | A selected group of larger buyers | Businesses where a few customers make up most of the exposure |
| Single buyer | One named customer | A dominant customer or one large contract |
| Single contract or project | Non-payment, and sometimes cancellation, under a defined contract | One-off or long-term contracts, including exports |
| Excess of loss | Losses above a large first loss you retain | Larger firms with their own credit control function |
Names and structures vary between insurers, so judge a policy by its wording rather than its label.
The credit limit is the most important number in any credit policy. It is the most the insurer will cover on one buyer at a time.
Single buyer cover concentrates everything on one limit. If the insurer cuts it, your whole cover for that customer changes.
Policies usually respond to two kinds of loss:
Export policies may add political risks, such as a government blocking currency transfers. Our guide to export credit insurance covers those. The policy normally pays a set percentage of the insured loss, so some of every loss stays with you.
Many problems with credit claims come from conditions rather than exclusions. These are the common reasons a loss is reduced or not covered, though each wording is different:
| Reason | What usually happens | How to avoid it |
|---|---|---|
| No credit limit in place | The sale is uninsured | Check every buyer has a limit before you deliver |
| Exposure above the limit | Only the amount up to the limit is covered | Monitor balances against limits, including orders in the pipeline |
| Delivery after a limit was cut | Later deliveries are not covered | Read insurer notices promptly and update your systems |
| Late overdue reporting | Cover may be reduced or lost for that buyer | Diarise the reporting deadline for every overdue invoice |
| Disputed debt | Not paid until the dispute is resolved | Keep proof of delivery and acceptance |
| Terms extended without consent | Debt may fall outside cover | Ask the insurer before agreeing extra time |
| Sales to connected companies or individuals | Commonly excluded | Ask how the policy treats them at the outset |
Retention of title, if your terms include it, can help reduce a loss, and some policies expect you to use it.
Illustrative: a packaging manufacturer has 300 customers, but two supermarket suppliers make up 45% of its debtors. A whole turnover policy would cover the spread, with named limits on the two large buyers. If the insurer will only grant part of the limit needed on one of them, a separate top-up or single buyer cover on the shortfall may be worth asking about.
Manufacturers and distributors can read more in our manufacturing insurance guide and distribution and wholesale guide; contractors should see credit insurance for subcontractors.
If an insured debt goes bad, you may also be able to recover the output VAT you paid on it. HMRC's VAT Notice 700/18 allows bad debt relief once a debt is at least six months overdue and written off. HMRC says that where you pay premiums for bad debt insurance, payment by the insurer does not affect your entitlement to relief. A payment from a guarantor, by contrast, reduces it.
Apex arranges trade credit insurance, and surety bonds for firms that also need bonding. 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 annual credit sales, payment terms, an aged debtor list and your largest buyers with the limits you want. Our trade credit insurance guide and the trade credit and export credit definitions give more background.
Whole turnover cover insures all or most of your credit sales, with a limit on each buyer. Single buyer cover insures the debt of one named customer. Whole turnover spreads risk and is often easier to place; single buyer suits a business with one dominant customer or contract.
It is the maximum amount the insurer will cover on a particular buyer at any one time. You apply for named limits on larger buyers, and many policies let you set discretionary limits on smaller ones. The insurer can usually reduce or withdraw a limit for future deliveries.
Common reasons include selling to a buyer with no limit or above its limit, delivering after a limit was cut, reporting an overdue account late, a disputed debt, or extending payment terms without consent. Each policy sets its own conditions, so diarise the reporting deadlines.
Usually not. Policies normally pay a set percentage of the insured loss, so part of each loss stays with you. The percentage, any waiting period and any first loss you carry are set out in the policy schedule.
Often yes, through single buyer cover, if an insurer is willing to grant a limit on that customer. It can be harder to place where the buyer's finances are weak, because insurers prefer a spread of risk rather than only the accounts that worry you most.
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.
