Export credit insurance
Category: Business and Money > Economics
Asked by: kentucky1999-ga
List Price: $3.50
20 Oct 2006 09:20 PDT
Expires: 19 Nov 2006 08:20 PST
Question ID: 775384
An alternative to using a letter of credit is export credit insurance. What are the advantages and disadvantages of using export credit insurance rather than a letter of credit for exporting (a) a luxury yacht from California to Canadian and (b) machine tools from N.Y to Ukraine?
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Re: Export credit insurance
From: myoarin-ga on 20 Oct 2006 09:55 PDT
Here is the site of the US government on the subject: http://www.export.gov/finance/exp_risk_mitigation.asp and here is one by a commerical insurer: http://www.meridianfinance.com/credit_export.shtml If you are asking about one-off transactions, on the first site scroll down and click on "Short-Term Single-Buyer Policy" This site also explains, and points out that on-off transactions usually cost more than a policy that covers ongoing export business. http://www.sba.gov/idc/groups/public/documents/or_portland/or_exportinsurance.pdf I expect that the price is not the only consideration. Claiming on an insurance policy would be some paperwork, probably a delay in receiving funds, and - read the fine print - may not cover 100%. A commercial letter of credit is issued by the buyer's bank, based on the payment and shipping terms and documents required. You don't ship until your bank has the L/C. Almost the only thing that can go wrong is war or the buyer's bank gong bust. You can search with "commercial letter of credit" and find more information.
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