Accounts Receivable Insurance

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Barron's Insurance Dictionary:

Accounts Receivable Insurance

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Coverage when business records are destroyed by an insured peril and the business cannot col- lect money owed. The policy covers these uncollectible sums plus the expense of record reconstruction and extra collection fees. It does not insure the physical value of the records themselves such as the paper or computer disks and tapes.

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Investopedia Financial Dictionary:

Accounts Receivable Insurance

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A form of credit insurance offered by commercial insurers to businesses. Accounts receivable insurance can take the form of multi-buyer insurance (a pool of receivables) or key buyer insurance.

Investopedia Says:
Accounts receivable insurance can be particularly useful for new or rapidly growing businesses that cannot afford to do credit checks. For a relatively low fee, accounts receivable insurance protects a company against loss on receivables, including default, bankruptcy or simply slow payment.

This insurance can also protect a company that is unable to collect receivables due to loss of the underlying records (for example, in a fire).

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