Credit insurance

How does credit insurance work? What benefits and risks does it bring?

Credit insurance is a relatively new type of insurance product, which is still quite rarely used in Slovakia. Credit insurance offers insurance protection if a customer fails to pay an invoice for goods delivered or services provided. Insurance protection can also apply to short-term trade credit provided by a seller to a customer during a transaction. Insured risks usually include inability to pay and so-called customer unwillingness to pay. Additional risks, such as natural hazards, political risks or administrative interventions can also be insured. According to the insured person’s wishes, insurance can apply to one or several customers. However, the insurance company has the final say in this matter and, according to its assessment of their payment ability, it can reduce the insurance limit or refuse insurance against certain customers.

Customer failure to pay an invoice duly and timely does not automatically constitute an insured event. After the invoice payment deadline, the seller first tries to enforce the claim – for example by sending a reminder. If unsuccessful within a certain period, the seller will involve the insurance company, which will then enforce the claim through its partner enforcement office, usually at its own cost. If payment remains outstanding, the situation is considered as an insured event and the insurance company will pay the insurance proceeds in the agreed amount. Insurance proceeds usually amount to 80-90% of the outstanding invoice, whereas the agreed amount of client insurance excess needs to be deducted.

One of the advantages of credit insurance is that the insurance company informs the client about changes in customers’ payment ability.

Credit insurance can be a useful tool, especially during larger transactions with unverified business partners or when entering a new market. The terms and conditions of credit insurance are set by the insurance company individually for each case, and the terms and conditions of individual insurance companies and their insurance products also vary. We therefore recommend consulting an independent expert before entering into an insurance contract.


Contact in Bratislava
Mgr. Pavol Benčo
Phone: +421 2 57 88 00 88

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