What is export insurance and how can I use it?

When taking on international trading opportunities, businesses incur risks to their finances from unexpected political events such as wars or currency restrictions in addition to the common concern about whether your buyer will actually pay for your goods.

This is where an export insurance policy can protect your business.

In this article we’ve collaborated with UK Export Finance (UKEF) to explain what export insurance policies are, what they can cover, and why your business could benefit from one if you export.

What is Export Insurance?

Export insurance (also known as export credit insurance) protects UK exporters from the risk of not getting paid by their overseas buyers.

Non-payment could be for a variety of reasons ranging from buyer insolvency to political or economic events in the buyer’s country. 

An export insurance policy acts as a safety net, ensuring your business gets paid for your goods or services.

When should I consider an export insurance policy?

When you win an export contract, you may incur costs before your goods are delivered or services are performed. 

You may need to buy raw materials, manufacture parts, or hire staff to complete the order. 

Export insurance provides cover so you can claim those costs if certain insured risks, such as the contract being unexpectedly terminated, occur. 

Export insurance is particularly valuable when you're entering new, unfamiliar markets, or when you’re offering credit terms to your overseas buyers, helping you grow your export business with confidence. 

It could also help if your export contracts represent a significant portion of your business’s turnover, and if you can’t afford to absorb losses in the event that you aren’t paid.

What can I get export insurance cover for?

You can get cover against both commercial and political risks including:

• if your buyer fails to pay you for your exports because they become insolvent
• if the contract is terminated early before your goods are shipped or services are performed
• if exports cannot be completed due to political events including the outbreak of war, or new restrictions are placed on imports to the buyer’s country.

Generally speaking, you can seek export insurance for any type of business or sector, but appetite to provide this cover will vary based on a range of factors including the value of the contract and the country that you’re exporting to. 

In the first instance, you should speak to a broker to see if they will be able to provide the cover you need.

UK Export Finance, the UK government’s export credit agency, can sometimes provide insurance cover where the private sector cannot – including in markets that private sector providers may not have appetite to support. 

UKEF provides finance, insurance, and guarantees to help UK businesses export and can complement the support available from private sector providers.

What isn’t covered by export insurance?

Export insurance doesn’t cover protection for your goods in transit, so you should seek separate cargo or shipping insurance policies. 

Certain losses cannot be covered by export insurance, including if you and your buyer are in an unresolved dispute – typically, you and your buyer will need to resolve your dispute or get a judgement before a claim can be reviewed.

What countries can I get export insurance for?

You should speak to your broker or UK Export Finance about the countries you’d like to export to – they will be best placed to provide information on their appetite to support exports to your buyers’ countries.

You can check UKEF’s ability to support exports to markets around the world on their website by finding the country of your buyer – if ‘cash or short-term cover’ is indicated as ‘yes’, UKEF can consider insurance for exports to that country.

Am I eligible for export insurance?

Businesses of all sizes and all sectors can apply for export insurance. 

A broker will be able to best advise if your business is eligible for an export insurance policy. 

Generally, to be able to apply for UK Export Finance’s Export Insurance Policy you must meet the following requirements:

• you’re exporting from the UK, the Isle of Man, or the Channel Islands and have an established business base in those places
• your buyer is based overseas in a country that UKEF covers
• at least 20% of the value of your export contract comes from UK, Isle of Man, or Channel Islands goods or services
• you’re unable to get export insurance from the private sector.

If you meet these conditions, it’s worth getting in touch with UKEF to see if they can support you. 

UK Export Finance can help particularly where you are dealing in exports to a single buyer, if you’re exporting to high-risk or emerging markets, or if the value of your exports is very small – there’s no minimum amount for a UK Export Finance Export Insurance Policy.  

How much does export insurance cost?

Insurance providers will charge a premium for export insurance, with the cost varying depending on a range of factors including the market you’re looking to export to, the length of time you need the policy to cover, and the status of the buyer. 

You will also need to understand what percentage of the risk your provider will cover. 

For example, UK Export Finance covers up to 95% of the insured contract value, so the rest of the risk is up to the exporter to cover. 

You can get a quote from UKEF on their website to give you an indication of how much their support may cost.

How do I get export insurance?

In the first instance you should speak to an insurance broker about the support available.

If they are unable to help find a private insurer, UK Export Finance may be able to provide a policy. 

When you approach a broker or UKEF, they will ask for information about:

• your company and its finances: including how many employees your company has and your estimated turnover in the most recent financial year
• details of your buyer: including their address and any trading history you have with the buyer such as if you’ve worked together before or have held any previous credit insurance for them
• the type of insurance policy you’re looking for: including whether you’re looking for cover for a single or multiple contracts, the value you’d like to insure, and the pre-credit period, if you want one
• the goods and services you’re exporting and the payment mechanism.

Export insurance in action

Kiverco is a family business based in County Tyrone, Northern Ireland that designs, manufactures and installs recycling plants across a range of sectors. 

Its UK-designed technology helps clients deal more sustainably with construction waste, dry mixed recyclables, municipal solid waste, and much more.  

With over 300 recycling plants in the UK and over 400 sites globally – across Europe, the US, Australia, New Zealand, and the Middle East – Kiverco has seen high demand from the waste sector in Saudi Arabia. 

UK Export Finance provided a £350,000 export insurance package to Kiverco so that they could take on major new contracts in Saudi Arabia – helping to boost the company’s revenue and support local jobs. 

‘Kiverco’s growth strategy will only be delivered by expanding export markets.’ said John Irwin, Managing Director at Kiverco. 

‘Partnering with UK Export Finance has already proven to be extremely beneficial in helping secure orders and Kiverco will continue to take advantage of the wide range of support available from UKEF to facilitate continued export growth.’

What other kinds of insurance can protect my exports?

UK Export Finance also offers a Bond Insurance Policy. 

For some overseas contracts, your bank may have to issue a bond on your behalf to your buyer. 

Or the bank could issue a counter-guarantee to a bank in your buyer’s country.

A Bond Insurance Policy protects UK exporters against demands for payment under a bond or a counter-guarantee that are unfair or caused by certain political events. 

UKEF can consider cover for all types of bonds that are connected to export contracts – including performance bonds and bid bonds. 

UKEF can cover up to 100% of the contract’s value.

What other support is available?

There is a range of other finance support available from both government and private sector sources to help you export with confidence. 

While insurance policies can help you get paid, your payment terms with buyers can sometimes mean that cashflow is temporarily restricted between shipping an order and getting paid.

That’s where working capital facilities, like UK Export Finance’s General Export Facility come in – a government guarantee to your lender can help you access a range of trade finance facilities, including loans and letters of credit.

How to get started with export insurance

Export insurance is a valuable tool that can help your business navigate the risks of international trade with confidence. 

By understanding how it works and the protection it offers, you can make informed decisions about whether it's right for your export strategy.

In the first instance, consider speaking with an insurance broker specialising in trade credit insurance or contacting UK Export Finance directly to explore options tailored to your specific needs and circumstances.

With the right protection in place, you can focus on what you do best - growing your business in markets around the world.