Accounts receivable insurance protects your business against non-paying customers.
So, what would happen if you were unable to collect on those previously-arranged payment agreements?  Would your profits suffer drastically? How much of your day-to-day income relies on contracts?  These are some questions to consider when determining if your business could benefit from Accounts Receivable Insurance coverage.
According to, an online consumer portal developed by the Independent Insurance Agents and Brokers of America (IIABA), companies differ in how they write accounts receivable insurance coverage, making it imperative that you work with a knowledgeable insurance professional to ensure that you understand your policy.  

Typically, Accounts Receivable Insurance Coverage will provide financial reimbursement for the following circumstances:

Loss of Records

While you may feel that you are protected from record loss because you have electronic copies of all your hard files, imagine what would happen if all your documents and equipment were lost in a fire or flood.  Accounts receivable coverage would provide reimbursement in the event that you were unable to collect your receivables lost in a covered peril.

Customer Dispute

Payment arrangements only work if both parties agree, and even the best businesses encounter uncooperative consumers.  Could your business survive if a customer refused to pay their bill or refused to accept the service or merchandise altogether?  Accounts receivable insurance coverage would protect your business in the event that a customer changes his or her mind.

Loss of Contracted Work

It’s important to remember that even those work agreements bounded by contract can fall through.  Sometimes, it can be the result of a very complex situation involving work permits and area regulations.  And other times it can be something as simple as there is no longer a need for the work to be completed.  Either way, if your company relies heavily on contract work and income, speak with an independent agent to discuss the unique risks this presents to your business and how accounts receivable coverage can help. 

Some businesses rely on the income promised from payment agreements more than others. Still, if your profits could be impacted at all by the loss of contracts, it’s a good idea to speak with your independent agent about how accounts receivable coverage could protect you and your business.  Preferred Mutual can offer accounts receivable coverage as an added endorsement to your preexisting business owner’s policy.  For more information and business tips, log-on to

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