Pre-Credit Guarantee
Page updated 29 Jun 2009
This section describes the pre-credit insurance that is offered by the New Zealand Export Credit Office (NZECO).
Exporters with a long production period or who produce custom-made products run the risk that their buyer may cancel the contract prior to delivery, leaving the exporter with incurred costs that cannot be recouped.The NZECO can cover these risks with a pre-credit guarantee.
The NZECO’s pre-credit insurance provides the exporter with a guarantee covering loss, which occurs before the supplier is entitled to payment under the terms of their supply contract, and which results from termination of the contract, non-fulfilment of the terms of the contract or interruption of the contract. The loss will be covered if it can be linked to either commercial or political risks covered by the guarantee, including insolvency of the buyer prior to shipping, or political decisions or actions in the buyer’s country that prevent the goods being shipped.
Pre-credit insurance will only be available in conjunction with an existing NZECO medium to long term guarantee so that the pre-credit period and the credit period are together greater than one year.
The period of pre-credit cover is highlighted in the diagram below.
