How Much Does Accounts Receivable Insurance Cost?

Great question! And one that is asked often. The simple answer is… it depends. However, that’s not too helpful in the context of this post.

Factors That Impact Credit Insurance Cost

1. Policy Structure

• Whole turnover (covering all receivables)
• Named buyer/key account (specific customers)
• Single buyer (one specific customer)

2. Policy Type

• Cancelable limits vs. non-cancelable limits

A spread of risk can reduce the premium rate, while insuring only high-risk accounts can increase costs.

3. Sales Volume

• Higher forecasted sales typically lead to better premium rates since policies are often priced based on sales volume.

4. Retention & Deductibles

• Policies with higher deductibles or retentions generally have lower premiums.

5. Credit Limits & Buyer Quality

• Insuring high-risk debtors increases costs.
• The policy’s limit of liability also affects pricing.

How to Determine Your Credit Insurance Cost

As with other forms of insurance, the best way to determine credit insurance cost is to obtain multiple quotes. Through the quotation process, businesses gain a better understanding of how credit insurers view their risk.

A starting point is approved coverage limits. If an insurer is unwilling to approve the requested credit limits due to negative information or capacity issues, the cost is almost irrelevant—coverage availability is key.

The Federal Trade Commission (FTC) provides guidance on managing credit risk.

Why Credit Insurance Cost Isn’t the Only Factor to Consider

Many businesses only explore credit insurance after a major credit loss—by then, it’s too late. A good analogy is trying to buy homeowner’s insurance when your house is already on fire.

Indirect Cost Savings of Credit Insurance

• Risk Transfer – If the insurer makes a poor credit decision, they pay the claim.
• Operational Efficiency – Reduces internal resources required for credit management.
• Proactive Risk Management – Insurers actively monitor credit risks and update information.
• Reduced Bad Debt Allowance – May allow companies to allocate fewer reserves for bad debt.

Explore industry trends and financial protection from the International Credit Insurance & Surety Association (ICISA).

Client Testimonials

Ed Winter – Senior VP, Finance and Administration, Bachmann Industries, Inc.

“The Securitas Global team has been fantastic to work with. Their professionalism and commitment set them apart. We value their advice, and the credit insurance solution they provided has not only protected our operations but also played a key role in helping us grow our business.”

David Patten, CEO & CFO, Everchem LLC

“Securitas and credit insurance have allowed us to focus on expanding our business with confidence. They helped Everchem realize that credit insurance isn’t really a cost, but a way to expand business revenues while reducing risk.”

Conclusion

The cost of credit insurance is influenced by multiple factors, such as committed sales, policy type, risk spread, and buyer portfolio quality. However, beyond direct premium costs, businesses should consider the indirect cost savings from reduced credit risk, proactive monitoring, and operational efficiencies.

Most insureds (92%–95%) renew their policies annually—not just for financial protection, but because of the value credit insurance adds to their business.

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.