Standard policies of ECGC cover losses of all types of risks

The Export Credit Guarantee Corporation of India (ECGC) provides credit insurance policies to Indian exporters to protect them against payment risks involved in export trade. ECGC offers several types of policies, each designed to cover different types of risks that exporters may face in their international trade transactions.

ECGC policies do not cover losses of all types of risks. Instead, the policies are designed to cover specific types of risks, such as:

Commercial Risks: These risks include the insolvency or default of the buyer, protracted default, and repudiation of the contract by the buyer.
Political Risks: These risks include war, civil unrest, expropriation, currency inconvertibility, and non-honoring of sovereign guarantees.
ECGC offers a range of standard policies, such as the Standard Policy, the Specific Policy, the Small Exporters Policy, the Transfer Guarantee, and the Financial Guarantee. Each policy provides coverage for a specific type of risk and includes specific terms and conditions.

For example, the Standard Policy covers commercial risks up to 95% of the invoice value, while the Specific Policy provides coverage for a single transaction, up to 100% of the invoice value. The Small Exporters Policy is designed for small exporters and provides coverage for commercial risks up to 90% of the invoice value. The Transfer Guarantee covers the risk of non-payment due to transfer restrictions, while the Financial Guarantee provides coverage for the risk of non-payment due to insolvency or bankruptcy of the buyer.

In conclusion, while ECGC offers a range of standard policies to cover specific types of risks that exporters may face, it does not provide coverage for losses of all types of risks. Exporters should carefully evaluate their risks and choose the policy that best meets their needs.

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What does standard policies issued by ECGC cover

The standard policies issued by the Export Credit Guarantee Corporation of India (ECGC) are designed to provide protection to Indian exporters against non-payment risks involved in their international trade transactions. The policies are intended to cover specific types of risks, including commercial risks and political risks.

The commercial risks covered under the standard policies of ECGC include:

Insolvency or default of the buyer: This risk occurs when the buyer is unable to pay for the goods or services as per the agreed terms of the contract.

Protracted default: This risk occurs when the buyer does not make the payment within the agreed time period.

Repudiation of the contract by the buyer: This risk occurs when the buyer refuses to accept or pay for the goods or services, despite complying with the agreed terms of the contract.

The political risks covered under the standard policies of ECGC include:

War and civil unrest: This risk occurs when the export transaction is affected by a war or civil unrest in the buyer's country.

Expropriation and nationalization: This risk occurs when the buyer's government takes over the property or assets of the exporter or the buyer.

Currency inconvertibility and transfer restrictions: This risk occurs when the buyer is unable to convert the local currency into foreign currency, or there are restrictions on the transfer of foreign currency out of the buyer's country.

The standard policies of ECGC also cover losses due to other risks, such as unforeseen events or disasters that impact the export transaction.

It is important to note that each standard policy of ECGC has specific terms and conditions that define the coverage provided, and it is essential for exporters to carefully evaluate their risks and choose the policy that best meets their needs.

What are risks covered by ECGC policies

The Export Credit Guarantee Corporation of India (ECGC) provides insurance coverage to Indian exporters against various types of risks involved in their international trade transactions. The risks covered under ECGC policies can be broadly classified into two categories: commercial risks and political risks.

Commercial risks refer to risks that arise due to the inability of the buyer to pay for the goods or services as per the agreed terms of the contract. The commercial risks covered by ECGC policies include:

Insolvency or default of the buyer: This occurs when the buyer is unable to pay for the goods or services as per the agreed terms of the contract.

Protracted default: This occurs when the buyer does not make the payment within the agreed time period.
Repudiation of the contract by the buyer: This occurs when the buyer refuses to accept or pay for the goods or services, despite complying with the agreed terms of the contract.
Political risks refer to risks that arise due to factors beyond the control of the exporter and are related to the political and economic conditions in the buyer's country. The political risks covered by ECGC policies include:
War and civil unrest: This occurs when the export transaction is affected by a war or civil unrest in the buyer's country.
Expropriation and nationalization: This occurs when the buyer's government takes over the property or assets of the exporter or the buyer.
Currency inconvertibility and transfer restrictions: This occurs when the buyer is unable to convert the local currency into foreign currency, or there are restrictions on the transfer of foreign currency out of the buyer's country.

ECGC policies also cover losses due to other risks, such as natural calamities, accidents, and unforeseen events that impact the export transaction. However, it is important to note that the coverage provided by each ECGC policy may vary depending on the specific terms and conditions of the policy.

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