Accounts Receivable Insurance

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DEFINITION of 'Accounts Receivable Insurance'

A form of credit insurance offered by commercial insurers to businesses. Accounts receivable insurance can take the form of multi-buyer insurance (a pool of receivables) or key buyer insurance.

INVESTOPEDIA EXPLAINS 'Accounts Receivable Insurance'

Accounts receivable insurance can be particularly useful for new or rapidly growing businesses that cannot afford to do credit checks. For a relatively low fee, accounts receivable insurance protects a company against loss on receivables, including default, bankruptcy or simply slow payment.

This insurance can also protect a company that is unable to collect receivables due to loss of the underlying records (for example, in a fire).

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RELATED FAQS
  1. How long are accounts receivable allowed to be outstanding?

    Since there are no specific legal requirements limiting the time period accounts receivable can be outstanding, in essence, ... Read Full Answer >>
  2. Can companies insure their accounts receivable?

    Companies can obtain credit insurance for their accounts receivable through commercial insurers. Accounts receivable insurance ... Read Full Answer >>
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