Businesses are familiar with the benefits of insurance in their day to day operations, but many companies selling into international markets may not realize that short term export credit insurance is also available.
This insurance can be designed to cover a single buyer or multi-buyer situations. As most companies entering a new market will be working with a single buyer, this is the focus of this basic review on the benefits of this insurance option. It can be offered through the Export-Import Bank of the United States for US-based businesses, but other countries offer similar programs for their business communities as well.
An Overview
It is important to realize that short term export credit insurance does not replace other types of insurance needed. These can include insurance for loss of property or property damage during shipment. You will still need to have the appropriate shipping, cargo, freight, property and casualty insurance.
Instead, the short term export credit insurance will provide coverage for the insured percentage of any loss if the buyer fails to pay or has not fully paid for the shipment 90 days after the due date of the invoice.
Policy Coverage
As with any insurance, it is essential that the shipment meet all criteria for coverage. This includes the shipping date being within short term export credit insurancethe policy coverage dates, the establishment of proof of a buyer obligation to pay your company for the shipment and all documents required to prove that the shipment occurred for the specific products the buyer agreed to purchase.
This insurance is not available to companies that are shipping military equipment or products that are deemed to be defense industry products. The products can also not be sold to or used by a security or military agency in the other country. They also cannot be products that violate the United States content requirements of at least 50% of the product being manufactured within the United States.
