The Art of Protecting Your Business

Debtor Insurance - Glossary of Terms

Claim

Formal application to the Insurer for payment of an unpaid debt due to insolvency or protracted default.

Customer Limit

This is the maximum credit exposure limit approved by the Insurer in respect of debts due from your customer.

County Court Judgement

An order of a court against a debtor to pay money owed.

Debtor Insurance

Provides your business with protection against the failure of a customer to pay their trade credit debts. It protects you against your customer's insolvency or the non-payment of invoices.

Insured Percentage

Is the percentage of the amount of loss that will be paid under the Policy in the event of a customer failure subject to any minimum retention, non qualifying loss or aggregate first loss where applicable.

Insolvency

A judicial or administrative procedure whereby the assets and affairs of the customer are made subject to control or supervision by the court or a person appointed by the court, for the purpose of reorganisation or liquidation of the customer or the rescheduling, settlement or suspension of payment of its debts.

Insurer

AIG UK Limited.

Maximum Extension Period

Means the maximum period specified in the policy by which you can extend the original due date for payment of the Insured Debt.

Maximum terms of payment

Means the maximum period of credit you may extend to the customer as defined and agreed in the policy.

Minimum Retention

This is the minimum amount of each loss that you shall retain for your own account as specified in the Policy.

On-Line System

A dedicated on-line system "e-bonded" is available for all clients which allows day to day management of the Debtor Insurance Policy.

Policy Period

Means the period of time from and including the Inception Date until such time as the policy is terminated in accordance with the terms of the Policy.

Premium

Amount paid by you to the Insurer in return for risk coverage. This is based on your turnover at an agreed premium rate plus Insurance Premium Tax payable monthly.

Protracted Default

Where a UK company fails to pay invoices a claim will be paid when you have a County Court Judgement awarded in your favour or where a non UK company fails 6 months after the due date of the invoices

Reporting Requirements

Policy Conditions require clients to advise the Insurer of customer debts that remaining 60 days or more overdue.

Turnover

Means the total of all invoices raised in respect of goods sold and delivered and for services rendered in the course of your business.

Whole Turnover Policy

The Debtor Insurance policy offers protection for all your company's trade receivables provided a customer limit has been approved.

Uninsured Percentage

Means the percentage of each loss which you must retain for your own account.

Work In Progress

Work In Progress means any costs or expenses you incur for the design or manufacture of goods to be delivered within a maximum of one month from the date of a written purchase order and which goods have little of no resale value and cannot be used to satisfy any alternative order and have been designed and manufactured specifically for that customer.