Trade credit insurance cost calculator
Enter credit sales, premium and bad debt to see the cover’s net cost and what it protects.
Net cost a year
The cover costs €26,050 yearly beyond expected claims, and €59,000 of the largest customer’s €500,000 stays with you if it fails, with break-even at bad debt rate 0.32%.
Yearly cost by bad debt rate
■ With cover ■ Without cover. To the right of the crossing, the cover costs less than carrying the losses yourself.
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Show calculation
Premium = Credit sales a year × Premium rate Expected bad debt = Credit sales a year × Bad debt rate Expected claims = (Expected bad debt × Share on covered customers − First loss) × Share of loss paid Net cost a year = Premium − Expected claims Kept if largest customer fails = Largest customer balance − (Largest customer balance − First loss) × Share of loss paid Break-even bad debt rate = (Premium ÷ Share of loss paid + First loss) ÷ Share on covered customers ÷ Credit sales a year
The calculation covers one year, takes the first loss once, assumes the largest customer is covered, with no refusals or recoveries.
Trade credit insurance cost
The calculator works out the yearly cost of trade credit insurance beyond the claims it is expected to pay. It uses your credit sales, premium rate, bad debt rate and the share of losses on covered customers.
The result shows what the cover costs at your bad debt rate and what stays with you if your largest customer fails. Compare the figures with the cost of carrying losses yourself.
Common questions
Is trade credit insurance worth it compared with carrying losses yourself?
Compare the premium with expected claims at your bad debt rate. The result shows the cover’s yearly net cost and the loss kept if your largest customer fails.
What does trade credit insurance cost?
The yearly net cost is the premium minus expected claims paid. The calculator estimates claims from bad debt on covered customers, after the first loss, then applies the insurer’s share.
How is the bad debt rate used in the calculation?
Expected bad debt is credit sales multiplied by the bad debt rate. The calculator uses the share on covered customers to estimate covered losses.
What does credit insurance pay if a customer goes bust?
For the largest customer, the calculator assumes the balance is covered. It applies the insurer’s share to the balance after the first loss, then shows what remains with you.
What is a trade credit insurance premium rate?
The premium rate is a percentage of credit sales. The premium is credit sales multiplied by that rate.