Nonpayment Coverage for Contracts
FCIA’s Contract Frustration Policies provide nonpayment coverage on contracts with foreign entities, either government or privately owned. Policy periods of up to 7 years are available. Coverage is noncancelable and cannot be unilaterally reduced or withdrawn by the insurer.
Contract Frustration – Government Obligor
Policies insure against pre-shipment and /or post-shipment risks on contracts with a government-owned obligor (also referred to as a Public Buyer).
- Pre-shipment risks include import or export embargo; buyer's country frustration of the contract; war and political violence; contract repudiation and failure to honor an arbitration award.
- Post-shipment risks include nonpayment or failure to honor a letter of credit. Coverage for pre- and post-shipment risks can be combined in one policy.
Contract Frustration - Private Obligor (Non-government owned)
Policies insure contracts with a private obligor against pre-shipment political risks and insolvency, and/or post-shipment nonpayment.
- Pre-shipment risks include import or export embargo; buyer's country frustration of the contract; war and political violence; and insolvency of the buyer.
- Post-shipment risks can include insolvency or nonpayment by the buyer or nonpayment of a letter of credit. Coverage for pre- and post- shipment risks can be combined in one policy. Private Buyer coverage does not generally include contract repudiation.
On Demand Bonds - Contractors
Policies insure fair and unfair calling of bid, advance payment or performance bonds related to trade transactions. Coverage is available on both government-owned (fair/unfair calling) and private obligors (fair calling for specified political risks only).
Contract Frustration – Non-Delivery
Policies insure against non-delivery of contracted goods by government-owned or private suppliers followed by a failure to return/repay the insured’s advance payment. The covered risks are similar to contract frustration policies.