Capital goods credit insurance
The capital goods credit insurance (IKV) is a special variant of the trade credit insurance (WCF). It protects against the consequences of a bad debt loss for the delivery of capital goods such as machines , systems , factories , aircraft, ships, etc. With the IKV, deliveries of goods can be insured at home and abroad. As with trade credit insurance, IKV only covers the economic risk. Political risks can be covered by the export credit guarantee of the Federal Republic of Germany.
Differences to trade credit insurance
Since these commercial goods usually take several months or years from invoicing to final payment, one generally speaks of a long-term transaction (as opposed to short or medium- term transactions with terms of days or a few weeks, which can be covered by a WKV) . Because of the comparatively long terms, the risk of bad debts due to payment difficulties or the insolvency of the customer for capital goods is much higher.
Manufacturing risk
The customer's insolvency can also occur during production (i.e. before delivery). In this case, there is no bad debt loss in terms of credit insurance , since the goods were not delivered. The production itself (for example a ship) represents a considerable financial investment by the manufacturer. Since it is usually a custom-made product, the costs already incurred can only rarely be reduced by selling the goods to another customer bring back in. This so-called manufacturing risk can also be covered by capital goods credit insurance. For this purpose, the pure manufacturing costs are estimated before production starts, which are then reimbursed by the credit insurer depending on the production status.