Trade credit insurance top-up scheme

23 April 2009

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Eligible businesses will be able to purchase 'top-up' credit insurance cover under a new scheme launched by the Government. The scheme is a short-term measure to provide help to businesses, in the current economic climate, whose credit insurance cover has been reduced by their provider.

Trade credit insurance

Trade credit insurance covers businesses against the risk of bad debt due to the insolvency or protracted default of their buyers. It can provide a replacement of working capital when bad debts and late payment impact on cashflow.

How does the scheme work?

The trade credit insurance (TCI) top-up scheme is open to eligible businesses trading in the UK, with a trade credit insurance whole-turnover policy. If your credit limit is reduced you can purchase top-up cover via your existing credit insurance provider, who will administer the scheme on the Government's behalf.

If you have any queries, complaints, or to apply for the scheme, you should contact your current credit insurance provider.

Click here to download a PDF with full details on the trade credit insurance scheme.

Key features of the TCI top-up scheme

It is open to new applicants from 1 May 2009 to 31 December 2009.
It can be purchased in respect to reductions in cover that have occurred since 1 April 2009, with cover under the scheme back-dated to start from when the reduction took place.
The duration of each policy - written under the scheme - is for a maximum of six months.
Following a reduction in cover you will have 28 days to apply to your credit insurance provider for the top-up scheme.
The value of cover you receive is determined by the level of cover provided by your underlying policy. If the level of your underlying policy changes during the six month period then the level of top-up cover will also change accordingly.
You can buy more than one policy - each policy bought under the government scheme covers your relationship with one buyer.

You may be eligible for the scheme if:

your trades are within the UK with payment terms of no more than 120 days
the original level of cover was in place for at least 30 days before it was reduced
your cover was reduced on, or after, 1 April 2009
the reduction in cover was triggered by the credit insurance provider

Please also note that:

top up cover is available if you hold a whole-turnover trade credit insurance policy
this scheme does not cover exports

Level of cover provided by the scheme

You can buy insurance to the value of the lower of the following amounts:

the amount equal to the level of cover now offered under your credit insurance policy
the amount which restores the level of cover to the amount you had previously
£1 million

For example, if cover provided by your underlying policy is reduced from £100,000 to £80,000 then you can buy top-up cover of £20,000 to restore cover to the original level of £100,000. If cover is reduced from £100,000 to £30,000 then you can buy top-up cover of £30,000, matching that of your underlying policy, giving you total cover of £60,000.

Top-up insurance is purchased as a six month policy at a price of two per cent of the value of the cover.

Note: The trade credit insurance top-up scheme does not cover businesses where cover has been completely withdrawn by the credit insurance provider.

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Trade credit insurance top-up scheme

Trade credit insurance

How does the scheme work?

Key features of the TCI top-up scheme

Level of cover provided by the scheme

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