Credit Insurance Checklist
Trade credit insurance can cover you against a customer's bad debt, but the policy only pays if you have met its conditions — this checklist helps you decide whether to take it and how to keep cover valid.
What's included
- Whether trade credit insurance suits your business
- The policy conditions that must be met for a claim to pay
- Day-to-day compliance steps to keep cover valid
- How insurance fits alongside your own credit controls
6 min read
What credit insurance does and does not do
Trade credit insurance pays a proportion of an insured receivable if a covered customer fails to pay through insolvency or protracted default. It can protect a business with a few large customers from a single catastrophic loss. But it is not a substitute for credit control — insurers impose limits, exclusions, reporting duties and time limits, and a claim is declined if you have not met them.
Use the checklist to assess fit and, if you take cover, to stay compliant so it actually pays when you need it.
The credit insurance checklist
- Is customer concentration high enough that one failure would hurt badly?
- What proportion of each receivable is covered (the insured percentage)?
- What customer credit limits will the insurer approve?
- What are the exclusions (related parties, disputed debts, pre-existing arrears)?
- What is the reporting duty for overdue accounts, and the deadline?
- What is the time limit to lodge a claim?
- Do your terms of trade meet the policy's requirements?
- Are your credit limits kept within insured limits?
- Is there a process to report overdues to the insurer on time?
- Premium cost vs the bad-debt exposure it removes
How to use it
Work through the fit questions first; insurance earns its keep most where a few customers make up a large share of your debtors. If you take a policy, the compliance items become routine: never exceed an insured limit, and report overdue accounts within the policy deadline — missing that is the classic reason claims fail.
Keep your own controls running underneath the cover. Use your account review checklist to stay inside insured limits, and the Merion tools to weigh premium against exposure. Even with insurance, pursue overdue accounts promptly.
This is general business information, not legal or financial advice. Read any policy carefully and get advice on whether it suits your business.
Tips
- Credit insurance suits businesses with concentrated customer exposure best.
- Claims fail when policy conditions — especially overdue reporting deadlines — are missed.
- Keep your credit limits within the insurer's approved limits.
- Insurance complements credit control; it does not replace it.
FAQ
Does credit insurance cover the whole debt?
Usually a percentage, not 100%. Check the insured proportion and the exclusions before relying on it.
Why do credit insurance claims get declined?
Most often because an overdue account was not reported within the policy deadline, or a credit limit exceeded the insured limit.
Do I still need credit control with insurance?
Yes — the policy requires it, and you must stay within insured limits and reporting duties for cover to hold.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.