Commercial Risk Insurance

Commercial risk insurance is a type of export credit insurance in international trade that mainly covers the risk of non-payment due to commercial reasons on the buyer's side, such as buyer bankruptcy, payment default, or refusal to accept goods. It is typically used when exporters sell on credit terms like open account (OA) or documents against acceptance (D/A) to mitigate buyer credit risk. Unlike political risk insurance, commercial risk insurance does not cover political events such as war or exchange transfer restrictions, but only the buyer's own commercial credit issues. Precautions include: assessing the buyer's creditworthiness before underwriting; policies usually have a coverage ratio (e.g., 80%-90%) and a deductible; exporters must fulfill obligations such as timely delivery and prompt claim notification, otherwise claims may be affected. In addition, commercial risk insurance is a subset of export credit insurance, which has a broader scope. In foreign trade practice, this insurance helps exporters obtain bank financing and enhances confidence in accepting orders, but attention must be paid to premium costs and exclusions.