Export credit insurance: cover for non-payment by foreign buyers

Export credit insurance (ECI) protects an exporter against the risk that a foreign buyer does not pay. It lets exporters offer open account terms with less risk and can make banks more willing to lend against foreign receivables. Policies are sold by private credit insurers and by government export credit agencies such as the Export-Import Bank of the United States (EXIM).

Checked against official sources: 2026-10

At a glance

What it isInsurance that protects an exporter against non-payment by a foreign buyer

Commercial risksBuyer insolvency, bankruptcy, protracted default or slow payment

Political risksWar, terrorism, riots and revolution, currency inconvertibility and expropriation

Short-term coverUsually 90 to 95 percent of the loss, for repayment periods up to one year

Medium-term coverUsually 85 percent of the net contract value, for one to five years

ProvidersPrivate commercial risk insurers and export credit agencies such as EXIM

CostPremiums plus deductibles; cover is usually below 100 percent

FinancingInsured receivables make lenders more willing to increase borrowing capacity

What export credit insurance covers

Export credit insurance pays the exporter when an insured foreign buyer does not pay for commercial reasons, such as insolvency, bankruptcy or protracted default, or for political reasons, such as war, terrorism, riots, revolution, currency inconvertibility or expropriation. Short-term policies cover sales with repayment terms of up to one year, usually at 90 to 95 percent, and medium-term policies cover one to five years, usually at 85 percent of the net contract value. The exporter carries the uninsured part of any loss.

Pros and cons

Pro: reduces the risk of non-payment by foreign buyers.
Pro: lets you offer competitive open account terms instead of asking for advance payment or a letter of credit.
Pro: insured foreign receivables can improve financing from your bank.
Con: the premium and the deductible add to costs.
Con: cover is usually below 100 percent, so part of the loss stays with you.
Con: a claim may be refused if the policy conditions were not followed.

Using it with open account and bank financing

Export credit insurance is used mainly with open account sales and to support pre-export financing. Because insured receivables are less risky, lenders are more willing to increase the exporter's borrowing capacity and offer better terms. In the United States, EXIM's multi-buyer policy covers a whole portfolio of foreign customers against commercial and political risks at 95 percent, and its proceeds can be assigned to a lender for receivables financing.

Step by step

List the buyers and countries you sell to on open account and your expected sales to each.
Ask a private credit insurer or your national export credit agency for a quote.
Check the cover percentage, deductible, credit limits per buyer and the political risks included.
Follow the policy conditions: credit limits, payment terms and reporting of overdue invoices.
Report late payments within the deadline set in the policy.
Tell your bank the receivables are insured if you want to finance them.

Documents you usually need

Insurance policy and buyer credit limits
Commercial invoices and sales contracts
Proof of shipment
Records of overdue payments and collection efforts

Common problems and how to avoid them

A buyer went bankrupt before paying.

What to do: Insolvency and bankruptcy are commercial risks covered by export credit insurance, usually at 90 to 95 percent for short-term sales.

Payment is blocked because the buyer's country stopped currency transfers.

What to do: Currency inconvertibility is a political risk that export credit insurance can cover.

The insurer refused a claim.

What to do: Claims may be denied when the policy conditions were not met; check credit limits, terms and reporting deadlines before each sale.

The bank will not finance foreign receivables.

What to do: Insured receivables make lenders more willing to increase borrowing capacity; share the policy with your bank.

Sources

Trade Finance Guide: Export credit insurance International Trade Administration, U.S. Department of Commerce
Multi-buyer insurance Export-Import Bank of the United States

Rules change often. This note is practical guidance based on the sources above, not legal advice. Confirm current requirements with the authority, your importer or a licensed customs broker before you ship.

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Common questions

What does export credit insurance cover?

Non-payment by a foreign buyer for commercial reasons such as insolvency or slow payment, and political reasons such as war or currency inconvertibility.

How much of the loss is covered?

Usually 90 to 95 percent for short-term sales and 85 percent of the net contract value for medium-term sales.

Who sells export credit insurance?

Private commercial risk insurers and government export credit agencies, such as EXIM in the United States.

Is export credit insurance better than a letter of credit?

It lets you sell on open account with protection, but it costs a premium and a deductible and usually covers less than 100 percent.

Does it help with bank financing?

Yes, lenders are usually more willing to increase borrowing capacity against insured foreign receivables.

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