Trade Credit Insurance in India | Protect Receivables from Non-Payment

Before we begin

Key terms used on this page

Insured / Policyholderthe business that buys the cover; the seller/supplier.

Buyerthe Insured's customer, whose non-payment is the insured risk.

Credit Limitthe approved cover amount the insurer sets on a specific buyer.

Insured Percentagethe share of an eligible loss the insurer pays; you keep the rest.

Waiting Periodtime after the due date before a protracted-default loss is payable.

Non-Qualifying Lossminimum loss size below which a claim isn't entertained.

Sum Insured / Maximum Liabilitythe most the insurer pays across the policy year.

Discretionary Credit Limit (DCL)limit you can cover using your own credit checks, without prior approval.

Cover

What Trade Credit Insurance Covers

It indemnifies an agreed percentage of an unpaid trade receivable when an approved buyer doesn't pay. Cover attaches only to a genuine trade transaction — the supply of goods or services — and only up to the credit limit set on each buyer.

Insolvency of the buyer

Pays an agreed percentage of the outstanding invoice value when a buyer becomes insolvent or bankrupt — a formal legal or administrative process to reorganise or wind up the buyer.

Protracted default

Pays when a buyer simply fails to pay within a defined period after the due date, even without a formal insolvency — the most common real-world cause of loss.

Political risk (exports)

For buyers outside India, optional cover responds to transfer restrictions, import bans, licence cancellation, or war and civil disturbance in the buyer's country.

Indicative example · varies by insurer & policy. If an approved buyer with a ₹1 crore credit limit fails to pay a ₹80 lakh invoice and the insured percentage is 85%, indemnity would be up to ₹68 lakh (85% of ₹80 lakh), subject to the waiting period, threshold and policy terms.

Variants

Types of Trade Credit Insurance Cover

Cover can be structured several ways depending on how many buyers you want protected and whether you trade domestically, for export, or both. Most established businesses choose a whole-turnover policy.

Type of cover	What it protects	Best suited to
Whole-turnover (flagship)	All credit sales to all (or a defined segment of) buyers under one policy.	Businesses with a spread of buyers wanting portfolio-wide protection and simpler administration.
Single-buyer / key-account	Receivables from one major buyer (permitted for Micro & Small Enterprises and project covers).	Firms with concentrated exposure to one large customer or a single long project.
Single-invoice	One specific invoice, typically financed/discounted via a TReDS-type e-platform.	One-off or selective protection tied to invoice financing.
Domestic vs export	Domestic covers commercial risks on Indian buyers; export adds optional political risk on overseas buyers.	Any business selling on credit at home, abroad, or both.

Why it matters

Why a Business Needs Trade Credit Insurance

Selling on credit is normal — but a single large default can wipe out the profit on many other sales. This turns an unpredictable bad-debt risk into a managed, insured one.

Protect cash flow & balance sheet

An insured receivable means a buyer default doesn't become a liquidity crisis. Indemnity replaces most of the lost invoice value, protecting working capital.

Sell more, safely

With buyers underwritten and credit limits in place, your sales team can extend competitive terms, take larger orders and enter new or export markets without carrying the full non-payment risk.

Stronger access to finance

Insured receivables are better collateral. Lenders and factoring arrangements often view an insured book more favourably, supporting working-capital lines.

Built-in buyer intelligence

Insurers continuously assess and monitor your buyers, giving early-warning signals on deteriorating credit so you can act before a default.

Self-assessment

Quick Self-Check: How Exposed Are Your Receivables?

Answer a few quick questions about how you sell on credit, and we'll map your bad-debt exposure on a simple heat-bar — then tell you whether trade credit insurance is worth a conversation.

0 of 11 answeredIndicative exposure map

1Your credit sales

Roughly how much of your annual sales are on open credit (no advance, LC or bank guarantee)?

On a typical sales deal, what % of the value do you take as advance before delivery?

Enter the lowest and highest advance you usually take — e.g. 10%, 20%, 50%. Scored on the minimum. Enter 0 if you sell fully on credit.

Minimum advance taken

%

Maximum advance taken

%

What is your typical credit period (or average days to get paid)?

2Your buyers

What % of your annual credit sales is held by your largest customers?

Concentration is read mainly off Top 5 / Top 10. Top 50 shows how long the tail is.

Top 5 customers

%

Top 10 customers

%

Top 50 customers

%

Your single largest buyer represents what % of your annual sales?

Assessed as a share of your sales, so it reflects what's big or small for your business.

Largest single buyer

%

How well do you know your buyers' creditworthiness?

Do you have a defined credit policy and limit-setting process?

3Markets & sector

What % of your sales go to buyers in sanctioned, war-affected or politically unstable countries?

Your best estimate of sales to high-risk or sanctioned markets. Enter 0 if none.

Sales to high-risk / sanctioned countries

%

Is your industry prone to payment delays or disputes?

4Impact & history

Overdue payments or bad debts in the last 2–3 years?

If your single largest buyer failed to pay, what would it do to your business?

Please answer every question (numeric fields can be 0).

Low exposureModerateHigh — act now

What's driving this result

Talk to a specialist →

This is an indicative self-assessment, not an underwriting decision or an offer of insurance.

Indicative only — not an underwriting decision.

Insured events

Causes of Non-Payment Covered

Insolvency / bankruptcy — the buyer enters a formal legal or administrative winding-up or reorganisation.
Protracted default — the buyer fails to pay within the defined period after the due date.
Political risk (exports) — transfer restrictions, import bans, licence cancellation, or war/civil unrest in the buyer's country.

Extensions

Optional / Add-On Covers

Depending on the insurer and your trade profile, cover can be extended:

Political-risk cover for named export markets
Pre-shipment / work-in-progress cover for goods made to a buyer's specification
Project cover for long-duration contracts (typically over six months)
Cover via banks/financial institutions and factoring companies for financed or discounted invoices
Single-invoice cover on TReDS-type platforms

Add-on names and scope differ between insurers; we confirm exact availability when arranging your policy.

The limits

General Exclusions

Trade credit insurance is broad but not unlimited. Common exclusions include (always read the specific policy wording):

Amounts above the approved credit limit for a buyer
Sales to private individuals (consumer sales)
Sales to an associated or group company (direct or indirect common control)
Sales to government departments on domestic terms (political risk on exports may apply separately)
Sales secured by Letter of Credit or Bank Guarantee, and cash-in-advance / cash-on-delivery sales
Disputed receivables — suspended until resolved or a decree obtained in the Insured's favour
Losses from the Insured's own wrongful or dishonest acts, or breach of policy warranties
The Insured's own retention — the portion above the insured percentage (e.g. the uninsured 15% where the insured percentage is 85%)

The journey

How Trade Credit Insurance Works

Setting up the policy

1

Share your details

Submit a proposal form with your buyer list, trading history and debtor ageing.

2

Get an indication

The insurer issues a non-binding indication (NBI) / quote with commercial terms.

3

Accept the terms

You confirm you're happy to proceed.

4

Buyers assessed

The insurer credit-assesses your top buyers and sets per-buyer credit limits.

5

Policy starts

Premium is paid and cover goes live.

Making a claim

1

Notify

Tell the insurer of an overdue or insolvent buyer within the notification timelines.

2

Document

Submit overdue notice, statement of account, invoices, PO / delivery proofs, demand letters and security-cheque details.

3

Recovery & settlement

The insurer pursues recovery during the waiting period; if unrecovered, the claim is settled per the insured percentage.

4

Share recoveries

Any later recoveries are split between insurer and Insured in proportion to the insured percentage.

Eligibility

Who Can Be Covered

Sellers / suppliers of goods or services who sell on open credit terms (the primary buyers of this cover).
Factoring companies (as defined under the Factoring Regulation Act, 2011).
Banks / financial institutions engaged in trade finance, against bills/invoices purchased or discounted.

Mechanics

Key Policy Parameters (Indicative)

Read first. The figures below are typical market examples to help you understand the mechanics. They are indicative only and vary by insurer, buyer and policy. Exact terms are confirmed in your quote and policy wording.

Parameter	What it means	Indicative example
Insured percentage	Share of an eligible loss the insurer pays.	Commonly ~85% (up to ~90%); the balance is your retention.
Maximum credit period	Longest credit term you may give a covered buyer.	Often up to ~120 days
Notification period	Latest point to notify an overdue before losing cover.	Often up to ~150 days
Claim waiting / settlement	Recovery attempt window, then settlement.	~150 days recovery + ~30 days to settle
Threshold (Non-Qualifying Loss)	Minimum loss size to lodge a claim (a franchise).	e.g. ~₹2.5 lakh; smaller defaults not entertained
Sum insured / maximum liability	Most the insurer pays in the policy year.	e.g. a multiple of premium (such as ~40×)
Per-buyer credit limit	Approved cover amount on each buyer.	Set by the insurer; may equal, be less than, or decline your request
Discretionary Credit Limit (DCL)	Self-approval limit using your own credit checks.	Exposures within the DCL are covered without prior approval

Your broker

Why Take This Policy from Go Insure India

Specialised expertise

We help you size credit limits, structure whole-turnover vs single-buyer cover, and match the right insurer to your trade profile.

Insurer-neutral advice

As a licensed broker we compare insurers on coverage, pricing approach, buyer-monitoring quality and claims record.

End-to-end support

From proposal form and buyer list to credit-limit approvals, endorsements and renewals — we manage the process with you.

Claims & recovery guidance

We help you notify correctly, assemble documentation and follow the claim through recovery and settlement.

Domestic & export

We arrange cover for Indian and overseas buyers, including political-risk options for exporters.

Pan-India service

We serve corporates across India, including Delhi/NCR, Chandigarh, Indore, Jaipur, Mumbai, Pune, Hyderabad and Bangalore.

Selection

What Makes an Insurer the Right Choice

Financial strength and reinsurance backing
Quality and speed of buyer credit assessment and ongoing monitoring
Credit-limit appetite for your specific buyers and markets
Claims-handling and debt-recovery track record
Policy flexibility — variants, add-ons and DCL terms
Responsiveness and servicing quality

Underwriting

Factors Determining the Credit Limit & Sum Insured

The buyer's financial strength, payment history and market reputation
Your requested exposure and trading relationship with that buyer
Your total insurable credit turnover (domestic and/or export)
Standard payment terms and average days-sales-outstanding (DSO)
Past bad-debt experience
Sector and country risk (for export buyers)

Plain English

Trade Credit Insurance Jargon, Explained

A few terms turn up in trade credit policies that you rarely see in other insurance. Here they are in plain English.

Protracted defaultnon-payment within a set period after the due date, without a formal insolvency.

Whole-turnovercover across all (or a defined segment of) your buyers under one policy.

Discretionary Credit Limit (DCL)a limit up to which you cover buyers using your own credit checks, without prior insurer approval.

Non-Qualifying Loss (threshold)a minimum loss size below which a claim isn't entertained (a franchise, not a deductible).

Insured percentagethe share of an eligible loss the insurer pays; you keep the rest.

Waiting periodthe time after the due date before a protracted-default loss becomes payable.

Maximum extension periodhow far a due date may be extended (typically once, with the insurer's consent).

Cease-shipmentyour duty to stop supplying a buyer once it is seriously overdue or insolvent.

Country limit of liabilitya cap on losses for any one country (export cover).

Malusa premium loading applied for poor claims experience; the opposite of a no-claims discount.

Subrogation / recovery sharingthe insurer's right to recover the debt after paying, with recoveries shared per the insured percentage.

Pre-shipment / pre-credit riskcover for goods made to a buyer's order before they ship.

Questions

Frequently Asked Questions

What is trade credit insurance?

It is a policy that protects a seller against non-payment by its buyers for goods or services supplied on credit, due to insolvency or protracted default (and, for exports, certain political risks).

What is the difference between insolvency and protracted default?

Insolvency is a formal legal or administrative winding-up or reorganisation of the buyer. Protracted default is simply non-payment within a defined period after the due date, even without formal insolvency.

Does it cover both domestic and export sales?

Yes. Domestic cover handles commercial risks on Indian buyers; export cover can add political risk on overseas buyers.

What is a whole-turnover policy?

A policy that covers all your credit sales to all (or a defined segment of) buyers under one contract, rather than a single named buyer.

Can I insure just one buyer or one invoice?

Single-buyer cover is available for Micro & Small Enterprises and for project covers; single-invoice cover is offered through invoice-discounting e-platforms such as TReDS.

How much of a loss does the policy pay?

An agreed insured percentage of the eligible loss, commonly around 85%, with the balance retained by you. The exact percentage is set in your policy.

What is a credit limit?

The approved cover amount the insurer sets on a specific buyer. Cover applies only up to that limit; exposure above it is your own risk.

How is the premium calculated?

Premium is typically based on your estimated insurable credit turnover and your risk profile, adjusted against actual turnover reported during the year. Rates are case-specific.

How is this different from ECGC cover?

ECGC is a Government of India export-credit insurer operating outside the IRDAI 2021 private-insurer guidelines and focused on exports. Private trade credit insurers cover domestic and export sales and offer customised whole-turnover programmes.

How is it different from factoring or a bank guarantee?

Factoring finances or buys your receivables; a bank guarantee secures a specific obligation. Trade credit insurance indemnifies you against buyer non-payment while you keep the customer relationship, and can sit alongside financing.

Get started

Protect Your Receivables. Sell on Credit with Confidence.

Talk to Go Insure India about a trade credit insurance programme matched to your buyers and markets — domestic and export.

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SEPARATE PAGE · Companion guide article (linked to/from this product page in production)

Trade Credit Insurance in India: How It Works, What It Covers, and How to Choose Cover

Why receivables are a business's biggest unsecured asset

For most B2B companies, trade receivables are among the largest assets on the balance sheet — and usually the least protected. A single insolvency or a chain of delayed payments can turn a profitable year into a cash-flow crisis. Trade credit insurance exists to protect that asset.

The Indian regulatory framework

Private trade credit insurance in India is governed by the IRDAI (Trade Credit Insurance) Guidelines, 2021, effective 1 November 2021. They widened who can be covered — sellers, factoring companies, and banks/financial institutions — and recognised single-invoice cover through invoice-discounting platforms such as TReDS, with a focus on improving access for MSMEs. ECGC, the Government of India's export-credit insurer, sits outside these guidelines and remains the main route for many exporters.

How the market is growing

Trade credit insurance is a small but fast-growing line in India. Independent estimates put the India market at roughly USD 0.45–0.49 billion in 2024–2025, with forecasts to between roughly USD 0.8 billion and USD 1.3 billion by 2033 depending on the source (for example, IMARC Group and Grand View Research). Growth is driven by rising domestic and cross-border trade, greater awareness of payment risk, and India's large MSME base of around 22 million enterprises.

Trade credit insurance vs ECGC vs factoring

	Trade credit insurance (private)	ECGC	Factoring
Primary purpose	Indemnify seller against buyer non-payment	Export credit risk cover for exporters & banks	Finance / purchase receivables for liquidity
Scope	Domestic and export	Mainly exports	Domestic and export financing
Keep customer relationship	Yes	Yes	Often the financier collects
Regulator / body	IRDAI guidelines (private insurers)	Govt of India, Ministry of Commerce	RBI-regulated factors

These tools are complementary: an insured receivables book can also make financing easier and cheaper.

Get paid even when they don't pay.