Buyer Default Insurance is a type of export credit insurance that primarily protects exporters against losses incurred due to default by overseas buyers, such as bankruptcy, refusal to accept goods, or payment arrears. Usage scenarios: After an exporter signs a contract with a buyer, if the buyer fails to pay or take delivery as agreed, the insurance company compensates according to the agreed percentage. Precautions: Typically, the exporter must purchase the insurance and pay premiums; the compensation ratio is generally 80%-90%, with deductibles and maximum limits; a credit investigation of the buyer is required before insurance, and defaults caused by the exporter's own reasons are not covered. Differences from other terms: Unlike 'Letter of Credit Insurance' (which covers issuing bank risks) and 'Political Risk Insurance' (which covers war, exchange restrictions, etc.), Buyer Default Insurance focuses on buyer credit risk within commercial risks.
📝 Examples
1. To reduce credit sale risks, our company insured this USD 1 million export order with Buyer Default Insurance; if the buyer defaults on payment, the insurance company will compensate 90%. (Note: Used to secure accounts receivable in credit sale transactions.)
2. Due to economic instability in the buyer's country, we recommend requiring a bank guarantee in the contract and additionally purchasing Buyer Default Insurance to doubly guard against refusal and payment default risks. (Note: Combined with other guarantee tools to strengthen risk control.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner