416 588 5273Trade credit insurance is a type of business insurance that protects your company from non-payment of invoices by clients. If a customer fails to pay due to insolvency or default, your insurer covers a percentage of the invoice, helping you maintain cash flow.
How Much Does Trade Credit Insurance Cost? Complete Guide
Trade credit insurance costs in Canada typically range from 0.1 to 1% of your total annual sales. Other factors, such as your industry, company size, debt history, customers’ creditworthiness, and internal credit procedures, are considered in the calculation.
When clients fail to pay, trade insurance kicks in, shielding your business from out-of-pocket costs, cash flow problems, and buyer defaults. Its total cost depends on multiple factors, such as coverage limits, claims history, and ultimately, the solidity of your business. The better your net finances, the higher the premium will be, based on the level of protection you require.
KASE Insurance helps Canadian businesses protect their receivables and maintain financial stability through trade credit insurance solutions tailored to your industry, client base, and financial objectives. Let's discover how much you need to invest in a comprehensive trade credit insurance policy that fits your business needs.
What is Trade Credit Insurance?
Trade credit insurance protects your business from the risk of customer non-payment. If a client defaults on an invoice, the policy reimburses a percentage of the outstanding debt, ranging from 75% to 95%, so you can maintain cash flow and continue operations.
In Canada, trade credit insurance is particularly valuable for companies that offer extended payment terms or undertake large contracts, both domestically and internationally. As a financial safety net, it shields your receivables from missed payments, insolvency, and client defaults, giving you the confidence to offer competitive payment terms without added risk.
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How Much Does Trade Credit Insurance Cost?
Trade credit insurance premiums vary depending on your coverage amount, client risk profiles, industry, and past claims history. On average, premiums range between 0.1% to 0.75% of total credit sales annually.
It typically equals 0.25 cents per dollar, which puts your trade credit insurance cost at around $2,500 if your annual sales reach $1 million.
Below is a general benchmark:
| Annual Credit Sales | Coverage Type | Estimated Premium (Annual) |
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| $500K – $1M | Basic Domestic Coverage | $500 – $2,500 |
| $1M – $5M | Standard Domestic + Export | $2,500 – $7,500 |
| $5M+ | Custom Global Coverage | Request a Custom Quote |
What Impacts Trade Credit Insurance Cost?
Several factors determine your trade credit insurance premiums:
Industry Risk
High-risk industries, such as construction, manufacturing, and retail, may experience higher premiums due to longer payment terms and economic volatility.
Customer Creditworthiness
Insurers assess your customer list and their financial strength to determine the likelihood of payment defaults. This includes reviewing your customers’ payment history, bankruptcy records, and financial health, often using third-party credit reporting tools provided by the insurer.
Coverage Limits & Deductibles
The more coverage you include in your package and the lower the deductibles, the higher your premiums will cost. Choosing the right balance between protection and affordability is key.
Claims History
Your premium rates hinge on your claims history. Frequent or high-value claims may lead to increased rates over time, whereas a clean claims history often results in more competitive pricing.
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How Does Trade Credit Insurance Work?
Here’s how trade credit insurance protects your business as a risk management tool:
- Choose the level of coverage and deductible that best suits your business needs. You may insure all receivables (whole turnover coverage) or high-value accounts (key account coverage), depending on your needs.
- The insurer reviews your client list and credit exposures. This determines the credit limits and commercial risk terms that best fit your profile.
- Your business operates as usual, protected against defaults. In the event of unpaid debts, the policy takes effect and pays you a percentage of the outstanding invoice.
Industries such as construction, manufacturing, and wholesale are particularly vulnerable due to their long payment cycles and large project-based contracts. Here’s where trade credit insurance becomes essential.
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Trade Credit Insurance Explained:
Let’s say your business sells $100,000 worth of goods or services on 60-day terms. If the client fails to pay due to insolvency, trade credit insurance will reimburse you for a significant portion of that unpaid invoice. |
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Benefits of Trade Credit Insurance
Trade credit insurance shields businesses from having to bear payment defaults themselves. With a policy in place, they can protect their working capital and operate their business with confidence.
- Improved Cash Flow: Secure your receivables and maintain liquidity, even in cases where clients fail to pay.
- Better Access to Financing: Banks and lenders that view insured trade receivables as lower-risk assets, improving your chances of securing credit.
- Competitive Advantage: Offer flexible payment terms to attract and retain clients, without increasing your exposure to bad debt.
- Smarter Credit Management: Many insurers provide credit insight tools to help you assess new clients and monitor ongoing accounts.
Whether you’re a small business in Ontario or a growing exporter, having trade credit insurance means you can extend credit with confidence. You won’t need to compromise your cash flow or business stability.
Learn more: Trade Credit Insurance: Is It Right for Your Business?
| What are the Benefits of Trade Credit Insurance for Small Businesses? |
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Trade credit insurance allows small businesses with limited working capital to stabilize their cash flow and recover from client defaults. It protects against unpaid invoices that can disrupt payroll, supplier payments, and growth plans.
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How Trade Credit Insurance in Canada Helps Businesses
The Canadian market for trade credit insurance continues to grow as small to medium-sized enterprises (SMEs) seek ways to protect their receivables. As the 10th-largest exporter in the world, Canada benefits from credit insurance, which helps businesses manage both domestic and international risks.
For businesses aligned with government contracts or export markets, organizations like Export Development Canada (EDC) also support credit protection.
Here’s how trade credit insurance in Canada supports businesses:
- Cross-border trade expansion: Companies can confidently extend credit terms to international buyers without shouldering full default risk
- Compliance with lender or investor requirements: Many insurers offer tools and underwriting expertise on foreign counterparties. For example, Export Development Canada (EDC) covers up to 90% of insured losses when a foreign customer fails to make payment.
- Credit assessments for international buyers: Global networks monitor buyers’ financial health, helping you make informed decisions when extending terms to new or existing customers.
Specialized providers and commercial insurance brokers nationwide offer coverage against unpaid invoices worldwide. At KASE Insurance, we collaborate with leading carriers to tailor policies that align with your industry, client risk exposure, and revenue model, whether in Canada or overseas.
Frequently Asked Questions
Any business that offers credit terms to customers, especially in construction, manufacturing, export, or wholesale sectors.
Premiums typically range from 0.1% to 0.75% of your annual credit sales.
Absolutely. It helps stabilize cash flow, reduce risk, and even support access to financing.
You can opt for selective coverage focused on your highest-value or highest-risk accounts.
Yes. We’ll assess your client base, industry risks, and financial goals to match you with the right coverage.
In Summary
- Trade credit insurance protects businesses by covering unpaid debts, typically reimbursing between 75% and 95% of receivables.
- It covers insolvency, defaults, and certain political risks.
- The policy helps maintain cash flow, improves access to financing, and enables safer credit terms.
- In Canada, premiums usually range between 0.1% and 0.75% of annual credit sales.
- This insurance is especially useful for SMEs, exporters, and companies with large contracts or extended payment terms.
- KASE Insurance customizes trade credit policies with leading Canadian and global carriers.
Shield Your Business Against Unpaid Invoices with KASE Insurance
At KASE Insurance, we specialize in crafting customized trade credit insurance coverage solutions tailored to the needs of Canadian businesses. Whether you want to protect your receivables, expand into new markets, or strengthen your financial strategy, we’ll structure coverage that aligns with your goals.
Our award-winning team of experts can help you:
- ✓ Compare quotes across top insurers
- ✓ Assess client risk profiles
- ✓ Customize policy terms for your industry
Ready to protect your receivables and grow with confidence? Request a free consultation with a KASE trade credit insurance advisor today.
(416) 588 5273 
