Buyer Credit Insurance is a type of export credit insurance that provides coverage to exporters against losses from buyer credit risks, such as bankruptcy, default, or refusal to accept goods. It is used when exporters adopt non-letter of credit payment terms like open account (O/A) or documents against acceptance (D/A) to mitigate buyer default risk, and also to enhance payment security when exploring new markets or customers. Key considerations: truthfully declare buyer creditworthiness and transaction background; insurers typically set coverage ratios (e.g., 80%-90%) and maximum indemnity limits; political and commercial risks may need separate coverage; premium costs should be included in quotations. Unlike seller credit insurance, which covers the seller's performance risk, buyer credit insurance focuses on the buyer's individual credit risk rather than country or bank risk.
📝 Examples
1. Given that the Brazilian buyer requested 90-day open account terms, our company decided to purchase buyer credit insurance to guard against the risk of payment default. (Note: Under open account settlement, transferring buyer credit risk through insurance.)
2. When approving export bills negotiation, the bank required us to provide a buyer credit insurance policy as repayment protection. (Note: The credit insurance policy can serve as a credit enhancement tool for financing.)
💡 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