COMMERCIAL INSURANCE
Credit insurance definition
Credit insurance is commercial insurance that protects against financial loss caused by customer insolvency or payment default.
In practice, this means insurance against financial loss caused by the insolvency or payment default of customers to whom credit has been granted. The cover is also known as ‘bad debts’ insurance. This gives insurers, brokers, reinsurers and risk managers a shared way to discuss the concept when reviewing policies, claims, regulation or market data.
This term is especially useful in insurance market analysis, policy wording and risk transfer decisions. It helps users interpret insurance terminology consistently across markets, policies and risk data. It also helps users compare how insurance is structured, regulated, priced or claimed across different markets.
Credit insurance is closely related to bad debts insurance, trade credit, insolvency and payment default. Linking these concepts together helps build a clearer glossary structure and gives readers a stronger understanding of how individual insurance terms connect within wider international insurance practice.
At a glance
- Used in
- Insurance market analysis, policy wording and risk transfer decisions.
- Purpose
- Helps users interpret insurance terminology consistently across markets, policies and risk data.
- Important because
- Clear definitions support better comparison of insurance products, market practices and regulatory requirements across jurisdictions.
- Related terms
- bad debts insurance, trade credit, insolvency and payment default.
Example of credit insurance
A supplier becomes insolvent and cannot pay for goods it has bought on credit. Credit insurance may protect the seller against the financial loss caused by that default.