How Credit Insurance Work

In a small business, one of the worst things is someone stealing from you. Take, for example, a small retail store in the mall. When a customer comes in to buy something, they usually have to take out their wallet from their pocket or purse and hand over money for whatever they are buying. And while most people are honest enough to give you what is owed to you, there’s always that slim chance that an individual might walk off with whatever merchandise they’re buying without paying for it at all.

If this happens often enough, this would probably account for a significant loss of income on your end – not counting if this incident occurs during the holiday season when sales tend to be higher than usual. This is where credit insurance comes in. Credit insurance acts as a sort of protection for the time gap between selling your goods to someone and receiving payment from them. If the credit insurance policy is good enough and covers a wide range of circumstances, then you can claim compensation from your insurer if someone steals from you – so long as there was no fault on your part in terms of security.

Another thing that credit insurance does is provide some form of assurance to sellers should their buyers be unable to pay up at all. For instance, if someone places an order with you online and pays through PayPal or another type of e-commerce system but never receives his goods due to unforeseen circumstances along the way (like say – his package got lost or destroyed), then this individual might end up disputing the charge on his account which results in the sale being reversed.