Many organizations use the trade credit insurance to try to make sure that their debt is safe when the trading climate is good. Nevertheless, simply acquiring trade credit insurance just cannot guarantee that you will receive the coverage that you are looking for. This kind of event could happen in a number of situations and for a number of reasons. Let's explore some of the circumstances below. As a leading insurance broker in Mumbai and the rest of the country, as well as in its capacity as a risk advisory expert, Raghnall has all the answers you may be looking for.
Circumstances For Trade Credit Insurance Claim Rejection
1. Late Filing
The most frequent cause of trade credit insurance denial is a claim that was submitted too late. This entails filing the claim outside the required timeline, and when the insurance policy’s maximum reported claim limit has been reached. The insurance denies claims because late claim filing makes it more difficult, if not impossible, for it to recover the money from the debtors. Trade credit insurance is often priced on the expectation that the insurance provider will pursue all available legal and non-legal options to at least partially recover the default transaction.
2. Exclusion of Information
The insurer in question has every right to deny your claim if you failed to provide any critical information on the trade credit insurance application document. Thus, crucial information may include the existence of past transaction defaults or the existence of debtors not disclosed in the document of insurance. Frequently, insurance applicants may withhold certain details in order to have their prices reduced. But, these acts can be expensive if the insurance decides not to pay your claim because of the details you may or may not have withheld.
3. Excluded Risks
It frequently occurs that the policyholder contacts the insurer to request coverage for risks that are listed on the insurance policy’s excluded list. Due to violations of the policy’s circumstances and nature, many claims for trade credit insurance tend to be denied. Here, the terms may cover things like the status of goods, regional details, and transactional terms, and much more. If the creditors in question are also associated with government entities, the insurance may also deny your claim.
4. Continued Shipping
Simply possessing trade credit insurance does not grant you license to behave irresponsibly. According to your policy, you must discontinue selling to customers who are already past the window on their payments. Yet, the insurance may deny claims relating to it if you do not stop shipping. In addition to these, there are more situations that trade credit insurance does not cover, as a result, the insurer declines to provide any form of coverage. Insolvency, irreparable contamination, and other situations are among those that are not included. These are just some of the details to keep track of when documenting for trade credit insurance.
5.No Received Payment
If you export products without obtaining prior payment as required by the contract, the insurance may deny your claims if the business deal with the buyer makes it explicit that the payment should be provided beforehand. If your contract stipulates that the transaction should be made prior, it entails that you may not export products without getting confirmation regarding the transaction.
If you may not have been aware of any of these possible reasons for rejection, it simply goes to show the importance of carefully understanding the details of your trade credit insurance policy. We at Raghnall are here to make sure you have every base covered when looking for the best possible package in trade credit insurance, corporate cyber insurance, and much more.
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