What are the different types of loan insurance?

letter of inspection is the type of insurance coverage that helps to ensure that the exporter banks are protected from the possibility of maintaining losses when extending services to the seller accepting the letter of credit as the conditions entered and accepted. This type of insurance basically protects the banks from any questions that may lead to the abolition or failure of these letter of credit, and situations in which the exporter is unable to balance the debt to obtain a credit letter. There are several different ways to issue a letter of credit insurance and protect the institution from the transmission of great risk.

One -time loan insurance is a one -time plan that deals with a single letter of credit. In this scenario, coverage is obtained for a short period of time and is related to any hardened payment by the buyer in the terms of sale. This approach is often ideal for businesses, toIn particular, they sell goods and services in the country of origin and only occasionally export goods to clients in other countries. Like all forms of letter loan insurance, this allows the seller to obtain a loan for a letter of credit in the expectation that the buyer will pay according to the conditions. If this does not happen and the seller is unable to repay the loan to the bank, it is possible to claim insurance, which will allow the bank to avoid loss.

For businesses that normally export goods and work with clients on the basis of accreditation, banks often offer so -called here the bank can accept several accreditations issued by the same exporter and provide preliminary financing to help with production and delivery costs. This type of flat coverage usually includes a clause known as irrevocable payments, allowing the bank to receive payments for these accreditation from buyers, deduct the amount and to hand over the rest to the seller as soon as PRent are fully retired. If one or more default values ​​occur for these letter of credit, the insurance provider will cover the balance due to these loans, unless the exporter can do so.

Many credit insurance plans will apply to a wide range of events, including the catastrophe at sea in which the goods are lost and never delivered to the buyer, theft during transit and many other questions that may arise during the transport of organized goods. Even problems in which a bank that issued an original letter of credit should close and there is no way to collect this financial instrument, the letter will be protected by the Bank's exporter from the loss. For this reason, many banks offering financial services exporters will use a letter for credit insurance to protect their interests, although there is no obvious reason to believe that the conditions of this original letter of credit will not be honored.