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 Coverage is noncancelable and cannot be unilaterally reduced or withdrawn by the insurer.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.

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