Aggregate First Loss (AFL)

A limit set within the policy where accumulated qualifying losses are not payable by the insurer. The insurer is only eligible for losses once the AFL is breached.


Formal application to the insurer for payment of an unpaid debt due to insolvency or protracted default.

Customer Limit

This is the maximum credit exposure limit approved by the insurer in respect of trade receivables concluded with your customer.

County Court Judgement (CCJ)

An order of a court granted against a debtor to pay money owed.


Requirements specified in the insurance contract that must be upheld by the insured to qualify for indemnification.

Condition Precedent

A condition or event that must come to pass before a specific contract is considered in effect or any obligations are expected of either party.

Confirmation of Debt

An Insolvency Practitioner confirms the outstanding balance showing on the debtor’s books and records. This figure is used for the claims payment process.


It is your duty to disclose all material facts and give an insurance company or underwriter all the facts that will allow him to assess the risk. This is embodied in many legal cases and is known as “utmost good faith”.


Some warranties are implied. For instance disclosure of all material facts is in effect a warranty.

Insured Percentage

Is the percentage of the amount of loss that will be paid under the policy in the event of a customer failure subject to any maximum liability, minimum retention, non-qualifying loss or aggregate first loss where applicable.


A judicial or administrative procedure whereby the assets and affairs of the customer are made subject to control or supervision by the court or a person appointed by the court, for the purpose of reorganisation or liquidation of the customer or the rescheduling, settlement or suspension of payment of its debts.

Insolvency Practitioner

An authorised person who specialises in insolvency, usually an accountant or solicitor. They are authorised either by the Secretary of State or by one of a number of recognised professional bodies.

Insurable Turnover

Means the total of all invoices raised in respect of goods sold and delivered and for services rendered in the course of your business, excluding VAT, Government Bodies, Cash and Pro Forma sales and sales to associated companies where you have a shareholding or financial interest.


American International Group UK Limited.

Judgement in Default

Means judgment without trial where a defendant has failed to file an acknowledgment of service; or has failed to file a defence.

Material Fact

Is a fact that would influence an underwriter in either accepting or declining a risk, and if accepting at what premium. Basically if you think that by giving an underwriter some information it may increase the premium or prevent them providing insurance then it is probably material and you must advise us of the information.

You have a continuing duty not only at inception and renewal but throughout the life of the policy to declare to Insurers any changes which may be regarded as a material fact. A material fact is one which would influence an insurer whether to continue to the cover the risk and/or the premium to be charged. Failure to disclose a material fact could result in your claim being turned down and/or your policy voided.

Maximum Extension Period (MEP)

Means the maximum period specified in the policy which you can extend the original due date for payment of the insured debt.

Maximum Liability

Means the aggregate limit for which we will be liable for all claims paid during each year commencing from the inception date and every subsequent 12 month period.

Maximum terms of payment

Means the maximum period of credit you may extend to the customer as defined and agreed in the policy.

Minimum Retention (MR)

A first loss whereby a specified sum (the minimum retention) or 10% whichever is the greater, shall be deducted from each loss.


Failing to advise an insurance company or underwriter of a material fact. This could result in your insurance becoming void and an insurer not paying out a claim.

Non Qualifying Loss (NQL)

This is a level of loss below which there is no claim under the policy- also known as a threshold. This type of first loss is normally used in conjunction with an aggregate first loss but can be used as an excess in its own right.

On-Line System

A dedicated on-line system, E-Bonded, is available for all clients which allows day to day on-line management of the debtor insurance policy.

Policy Period

Means the period of time from and including the inception date until such time as the policy is terminated in accordance with the terms of the policy.


The amount paid by you to the insurer in return for risk coverage. This is based on your turnover calculated at an agreed premium rate plus Insurance Premium Tax.

Principal to Contract (PTC)

The company who is legally responsible for payment of invoices.

Protracted Default

If one of your customers fails to pay its obligations to you, but has not gone into any form of administration, a claim can be made under the policy.

Reporting Requirements

Policy conditions require clients to advise the insurer of customer debts that remain overdue beyond the MEP.

Retention of Title

Is an agreement for the supply of goods or raw materials on credit is a provision under which the supplier maintains their status as owner until paid.

Insurable Turnover

Means the total of all invoices raised in respect of goods sold and delivered and for services rendered in the course of your business, excluding VAT, Government Bodies, Cash and Pro Forma sales and sale to associated companies where you have a shareholding or financial interest.

Whole Turnover Policy

The debtor insurance policy offers protection for all your company’s trade receivables (with the exception of the exclusions advised in the policy wording).

Uninsured Percentage

Means the percentage of each loss which you must retain for your own account.


Warranties are imposed on a policy to ensure that a certain action is done and must be complied with. If a warranty is breached then the whole policy may become void and any claim, even though it may have nothing to do with the warranty, will not be paid.

Work In Progress

Work In Progress means any costs or expenses you incur for the design or manufacture of goods to be delivered within a maximum of one month from the date of a written purchase order and which goods have little or no resale value and cannot be used to satisfy any alternative order and have been designed and manufactured specifically for that customer.

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