Credit Insurance with predelivery cover
Credit insurance with pre-delivery is a portfolio insurance that covers all or part of the credit sales that a company has to its customers.
The insurance covers the risk in the period both before and after delivery.
The product is intended for companies that produce by order and where the production period is long.
The insurance coverage incepts as soon as an order is confirmed and applies until payment has taken place.
The product covers losses on receivables due to both commercial risk (insolvency and protracted default) and political risk (war, internal turmoil, lack of currency).
"Credit insurance with pre-delivery cover" is best suited to cover the sale of standard goods that have a significant market value.
The product is based on standard credit insurance, but includes the period before delivery. The insurance is contingent on the seller's obligation to produce and deliver the goods, as well as the buyer's obligation to pay.
The insurance already applies from the time of the agreement. If delivery has taken place is not essential. The insurance does not apply to non-payment due to the buyer's right to cancel.
In many cases, credit insurance with pre-delivery coverage will be used in a financing agreement. The example below shows a manufacturing company that produces by order.
It takes a long time from confirmation of order to the product is finished and delivered. The production company already receives financing at order receipt, at 70% of the order value.
The funding ratio increases when delivery is completed. NB! GIEK Kredittforsikring does not provide the financing itself, but assures that the settlement from the end customer takes place.
The finance company pledges the insurance policy issued by us, so that they take over the right to a possible compensation payment.