Question

"Excess-of-loss" trade credit insurance policies:

tend to have a large annual aggregate deductible.

require the insurer to assign a credit rating to each account that is covered by the policy.

are designed to provide protection for a normal level of credit losses.

are only used in domestic trade credit insurance.

Answer 1

"Excess-of-loss" trade credit insurance policies:

Tend to have a large annual aggregate deductible.

Under such "excess of loss" insurance policies, insurer and insured mutually agrees for a specified amount known as deductible. In case there is a credit loss to the insured individual or entity, insurer would pay the insured the total amount of loss exceeding this deductible amount.

Since liability of insurer can be unlimited above deductibe amount, therefore to minimize such amounts, such policy contracts usually tend to have a large annual total deductible amount so that insurer has to pay only amount exceeding this deductible.