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 >>
  3. What happens if my insurance claim falls below the deductible level?

    Though the ins and outs of health insurance are often confusing, the concept of the insurance deductible is relatively straightforward. ... Read Full Answer >>
  4. How is the deductible I paid for my insurance claim treated for tax purposes?

    The deductible you pay on your health insurance policy may be tax-deductible if you meet certain conditions. However, whether ... Read Full Answer >>
  5. What level of reserve ratios is typical for an insurance company to protect against ...

    In the United States, and most developed nations, regulators impose required statutory capital reserve ratios on insurance ... Read Full Answer >>
  6. What risks do I face when investing in the insurance sector?

    Like all equity investments, insurance companies present investors with market risk. Insurance companies, like banks, also ... Read Full Answer >>
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