Credit Insurance provides protection to the creditors from the possibility of non payment of debt. Credit insurance covers general or particular debts or any debt which will be incurred after the policy is effected. A surety of an insurer can also avail a credit insurance policy for protection of a similar nature. Liability of the insurer may differ from case to case subject to the terms contained in the policy. The liability of insurer comes into effect in case of non payment of a debt on the due date or within a specified period after the due date, in the event of insolvency of the debtor etc. A Credit Insurance policy may require that the insured should first recover from the debtor, whatever amount is possible and the balance amount shall be payable by the insurer.
