Credit Risks
These are specialized insurances – and designed to protect the Insured- mainly Companies against the risks of the buyer’s insolvency or default.
Scope of Cover The cover generally provided is for the money due under the invoices when the amount becomes a bad debt due to reasons such as insolvency/default of the buyer, political disturbances in the country goods have been exported to, change of government and regulations, which prevents the seller/supplier from receiving the amounts due to him.
The amount payable would usually be for the insured percentage of the net debt or the credit limit if the net debt exceeds the credit limit. In effect nothing more than the credit limit will become payable. Usually it would be for a specified percentage of the bad debt. A deductible is almost always imposed. The indemnity would be in respect of such shipments and services performed within the period of insurance for which invoices have been sent to buyers within the maximum invoicing period.
Types of covers
Cover can be taken for a Policy period of the normal 12 months covering Insured’s entire turnover. Separate credit limits for individual buyers can also be fixed.
Premium
Usually payable as deposits against the estimated sales and adjusted on actual sales at the end of the policy period.
Customers
Mainly Exporters of goods and services.
Fidelity Guarantee Insurance
This policy reimburses for direct pecuniary loss due to acts of fraud or dishonesty or forgery or embezzlement committed by any of the Insured’s employees in connection with his/her occupation during the uninterrupted continuance of employment.
Loss of Profits Insurance (LOP)
This policy is devised to cover the monetary loss arising from the interruption in the business activity due to physical loss of the property by an event covered for insurance. The insurance is to be taken for a sum equivalent to the loss of gross profit during in the period of interruption envisaged for the restoration of the property damaged by the event covered for insurance. The insurance will also cover the increased cost of working in maintaining the revenues/turnover besides the reduction in gross profit.
This insurance is given only if there is a basic Fire and allied Perils Policy and/or Machinery Breakdown Policy, which covers the Material Damage of the asset insured. The admission of a claim under the material damage policy is a prerequisite for admission of a claim under the LOP Policy.
Money in Transit
This policy provides cover against loss of money in transit whilst being carried as described in the policy by the Insured or Insured’s authorized employee(s), occasioned by robbery, theft or any other fortuitous cause. It also covers loss by burglary of house breaking whilst money is retained at Insured’s premises, in safe(s) or strong room.
Organizations can take this policy for cash carriage from or to banks, while in transit from one branch to other branch.
Liability Insurance
With the spread of business and new service oriented organizations coming into the economy and the right of the consumers becoming all important – the exposure to third party liabilities is causing concern to the entrepreneurs and professionals alike.
Legal Liabilities could arise from different circumstances and the time lag between the actual error or accident and the manifestation of the damage and the consequent legal claim can be very long. Hence continuous protection from third party claims is prudent.
Insurance Companies have recognized this and the number of Legal Liability Policies have increased- but which would be the right one for the organization and who can be the best provider for such covers – these are questions that one has to make. Heritage is well equipped with executives who understand these covers and can help make the most suitable choice of covers.
Our experience in handling such insurances will help in
- Understanding the clients exposures,
- Sifting through the legal contracts – to identify the risks and type of cover required,
- And match it to the Insurance Policies that are available in the Indian Market or overseas,
- And ensure that the clients get the most competitive and highly responsive insurance policies.
For details of different Liability covers available in the market and the types of customers it is useful for, click here.