Trade Credit Insurance UK — Protecting Against Non-Payment

What It Covers

When Does Trade Credit Insurance Respond?

Trade credit insurance protects the money owed to you by other businesses — a risk that grows the more you sell on credit terms.

A customer becomes insolvent and can't pay an outstanding invoice
A customer fails to pay within an agreed period after payment falls due (protracted default), even without formal insolvency
An overseas buyer defaults, where recovery would otherwise be especially difficult
A single large contract or buyer represents a concentration risk you want specifically protected

💡 Two common structures: Whole turnover cover insures your entire customer base, while key account or single-risk policies cover only specific named buyers or a single large contract. Whole turnover is usually more cost-effective for businesses with many customers; key account cover suits businesses with a small number of large, concentrated exposures.

How It Works

Credit Limits & Ongoing Monitoring

Unlike many other business covers, trade credit insurance actively monitors risk throughout the policy year — not just at renewal.

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Insurer-set credit limits

The insurer assesses each buyer's creditworthiness and sets an approved credit limit. You're generally only covered for the amount within that limit — exceeding it without agreement can leave the excess uninsured.

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Limits can change mid-policy

Insurers monitor buyers' financial health on an ongoing basis and can reduce or withdraw a credit limit if a buyer's position deteriorates — a real consideration for businesses relying on a stable limit throughout the year.

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Co-insurance / retention

Most policies require you to retain a percentage of each loss yourself — commonly around 10% — keeping your own credit management incentives aligned with the insurer's.

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UK Export Finance support

For exporters, UK Export Finance (the government's export credit agency) can provide insurance or guarantees alongside or in place of private market cover, particularly for higher-risk markets where private capacity is limited.

⚠️ Watch your approved limits: If you continue supplying a customer beyond your insurer-approved credit limit without getting it increased, any loss above that limit is typically not covered — a common and costly misunderstanding.

Who Needs It

Is Trade Credit Cover Right for You?

This cover matters most where non-payment risk could seriously damage the business.

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Manufacturers & wholesalers

Businesses regularly selling on credit terms to other businesses.

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Exporters

Businesses selling overseas, where recovering unpaid debts is harder and buyer information is less accessible.

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Customer-concentrated businesses

Businesses where a small number of large customers represent a significant share of revenue.

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Businesses using invoice finance

Lenders providing invoice financing or asset-based lending often view trade credit insurance favourably, since it de-risks the receivables being financed.

Choosing Cover

What to Look for in Trade Credit Cover

A few things worth checking before you buy, whichever UK insurer or broker you compare.

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Whole turnover vs key account

Choose the structure that matches your customer concentration — whole turnover for a broad customer base, key account for a few large, critical buyers.

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Credit limit process

Understand how quickly the insurer can assess and adjust credit limits — a slow process can hold up new business with time-sensitive customers.

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Overseas buyer support

If you export, check the insurer's experience and appetite for your specific markets, and whether UK Export Finance products might complement private cover.

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FCA authorisation

Before buying, confirm any insurer or broker is authorised and regulated by the Financial Conduct Authority — check the register at register.fca.org.uk.

🤝 We're finalising partnerships with FCA-authorised UK insurers so you can compare real quotes here soon. Check back shortly, or get in touch if you'd like to be notified when comparisons go live.

FAQ

Frequently Asked Questions

Whole turnover cover insures your entire customer base under one policy, while key account cover insures only specific named buyers — usually your largest or highest-risk customers. The right choice depends on how concentrated your customer base is.

Amounts owed above the approved credit limit for that buyer are typically not covered, so it's important to request a limit increase from your insurer before extending significantly more credit to a customer.

Yes — insurers monitor buyers' financial health on an ongoing basis and can reduce or withdraw a credit limit if a buyer's position worsens, which is a key feature (and sometimes frustration) of this type of cover.

Most policies cover both — formal insolvency, and protracted default, where a customer simply fails to pay within an agreed period after the payment was due, even if they haven't formally become insolvent.

No — most policies include a retention, commonly around 10%, where you bear a small share of each loss yourself, which helps keep your own credit management practices aligned with the insurer's interests.

Not necessarily — UK Export Finance often works alongside private market cover, and can be particularly useful for higher-risk export markets where private insurer capacity or appetite is more limited.

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Trade Credit Insurance — Protecting What You're Owed

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