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Umbrella Credit Insurance Policy - EXIM

EX-IM BANK UMBRELLA COVERAGE
AN INTRODUCTION

WHO IS ELIGIBLE

Upon application for coverage, companies will be considered eligible if they:
have average annual export credit sales of less than $3 million over the past two years;
have had no prior Ex-Im Bank coverage during the past two years;
meet the U.S. Small Business Administration definition of a small business; and
have a positive net worth with at least one year successful operating history.

Exporters may remain in the policy as long as:
annual export credit sales remain below $3 million; and
they continue meet-the U.S. Small Business Administration definition of a small business.

THE BENEFITS

Risk Protection

Protects your foreign receivables from covered commercial and political risks.

A Marketing Tool

Enables extension of more attractive credit terms to assist you in competing for foreign sales.
Reduces the need for costly confirmation of letters of credit.
Enables expansion into new markets.

A Financing Aid

More favorable financing may be arranged by assigning policy proceeds to a lender as collateral. If the assignee bank complies with its responsibilities, it will be held harmless from many defenses to nonpayment of a claim which ordinarily would be asserted.

HOW IT WORKS

Me Administrator of the Umbrella Policy agrees to act as a representative of the insured exporter, to pay premiums and to submit designated forms to Ex-Im Bank.
The insured exporter agrees to provide the Administrator with the information necessary to maintain coverage.

THE COVERAGE

Political Risks Covered

A foreign government's inability to convert local currency into U.S. dollars ("transfer risk').
Specified changes in import or export regulations occurring after shipment.
War, civil strife, revolution, or expropriation by a government authority.

Commercial Credit Risks Covered

Nonpayment for reasons other than political risk, including default, insolvency and bankruptcy, but excluding product disputes between the exporter and the buyer.

Value Covered

100% of gross invoice value for Iowa due to political risks, 95% for commercial risks.

THE COST

A fixed rate schedule applies, with premium rates based on repayment terms and type of buyer.
Pay-as-you-go monthly reporting means premiums are paid only as shipments are made.

EXTENDING CREDIT

A specific credit line is established by Ex-Im Bank for each buyer. Requests for credit approvals are processed usually within two weeks after a completed application is received.

CLAIMS

Claims can be filed between 90 and 240 days after the date of default.
Properly documented claims are paid within 60 days of receipt.

ELIGIBLE-PRODUCTS

Ex-Im Bank covers non-military goods or services with at least 51 % U.S. content prior to mark-up, including labor.

OTHER IMPORTANT FEATURES

Exporters are expected to insure all overseas sales made on credit terms during the policy period, however single-buyer coverage can be considered (without a minimum premium and without the special hold harmless--assignment) provided the coverage is used to support an Ex-Im Bank or public entity Administrator working capital loan or guarantee.
Confirmed letters of credit and cash-in-advance sales are excluded.
Maximum credit terms are generally 180 days. For capital equipment and bulk agricultural commodities, 360 days may be approved.

WHO WE ARE

Ex-Im Bank is the Export-Import Bank of the United States, an independent agency backed by the full faith and credit of the U.S. Government. A list of current Umbrella Policy Administrators is available from Ex-Im Bank.

WHO TO CONTACT:

Export Insurance Services, INC.
P.O. Box 11602 - Atlanta, Georgia 30355-1602
Telephone: (706) 210-4379 - Fax: (404) 237-9933
E-mail: info@exportinsurance.com

For more information, contact or ask your insurance agent or broker to contact:

EXPORT-IMPORT BANK OF THE U.S., INSURANCE DIVISION,
811 VERMONT AVE., NW, WASHINGTON, DC 20571 (202/565-3630)

Or call one of the regional offices in the Midwest (312/353-8040), Northeast (212/466-2950), Southeast (305/526-7425), Southwest (713/589-8182) and West (310/322-1152)

This is not a solicitation by the Export-Import Bank of the United States or its employees. It is a descriptive summary only. The complete terms and conditions of the policy are set forth in the policy, application and endorsements.

 

UMBRELLA INSURANCE POLICY
EXPLANATION OF COVERAGE

The complete terms and conditions of the insurance policy are detailed in the Umbrella Insurance Policy itself (copy attached). The insurer under the policy is the Export-Import Bank of the United States (Eximbank), an agency of the U.S. Government. The policy is issued to Export Insurance Services, Inc. the Administrator. The administrator, as well as the insured, has certain responsibilities Under the policy. These are outlined below.

WHAT IS COVERED

The policy covers losses arising from a foreign buyer's failure to pay for products shipped b you pursuant to an agreement with the buyer. If the buyer becomes insolvent or does not pay his debt within 90 days    from the agreed upon date of payment, the loss is commercial and the coverage is 95% of the invoice value. There is no deductible.

If the buyer does not pay because of specified political occurrences, such as war, hostilities, civil war, rebellion, confiscation, expropriation, revolution, cancellation of import licenses or currency inconvertibility, the loss is political and the coverage is 100%. There is no deductible

You will be covered for the amount of your loss subject to the amount of the Special Buyer Credit Limit approved by Eximbank for the particular buyer and subject to the insured percentage of coverage indicated above.

The amount of your loss is subject to the gross invoice amount which is the sales price plus insurance, freight and other charges paid in U.S. dollars in the United States.

REQUIREMENTS OF AN INSURED TRANSACTION

The policy shall not apply to any shipment unless each of the following conditions is met:

1. The product sold must be:

a. Shipped from the United States to a buyer approved by the Insurers in a Special Buyer Credit Limit during the policy period or such shorter period as may be specified in the Special Buyer Credit Limit;
b. Authorized in the Special Buyer Credit Limit;
c. Of U.S. production or manufactured so that one-half of the value exclusive of mark up has been added by labor and or raw materials of U.S. origin.
d.  Shipped in accordance with the terms and conditions of the Country Limitation Schedule which is attached as a policy endorsement, and,
e. In conformity with the laws of the United States and of the buyer's country.

2. The terms of sale must:

a. Be specified in a contract of sale or written obligation;
b. Require payment in the United States in U.S. dollars or other currency or place of payment approved by Eximbank;
c. Require payment within 180 days from date of arrival of the products at the port of importation unless shorter terms are required by the Special Buyer Credit Limit. (Certain bulk agricultural products - 360 days)

WHAT IS NOT COVERED

1. Any shipment which does not meet the requirements of an insured transaction (see above);
2. Any loss due to your fault, your administrator's fault, or the fault of your agent;
3. Any political risk claim resulting from exchange fluctuation or devaluation of the currency of the buyer's country occurring before the due date specified in the written obligation or the date of deposit;
4. Any shipment which is not reported by your administrator or for which premium is not paid by your administrator;
5. Any shipment not reported when payment becomes 90 days past due;
6. Any claim which is not filed within the required time period Of 240 days from the date of default;
7. Any shipment for which there is a dispute between you and the buyer;
8. Any loss where either you or the Administrator failed to comply with the terms of the policy.

LIMIT OF LIABILITY

Eximbank shall only be liable for the insured percentage of the amount of the Special Buyer Credit Limit approved for each buyer. Eximbank's total liability to you shall not exceed the aggregate limit stated in the endorsement which adds your name to the policy.

RESPONSIBILITIES OF THE ADMINISTRATOR

1. The Administrator is the Exporter's agent for handling all matters pertaining to the Umbrella Policy. The Administrator has no insurable interest in transactions undertaken by the Exporter but acts as his representative for purposes of all communications with, and reporting to EXIM. The Administrator agrees:

a. To submit to EXIM on your behalf an application together with required supporting information for a Special Buyer Credit Limit on buyer to whom shipments are to be made;
b. To submit to EXIM on your behalf no later than the 30th day of each month, a monthly report form indicating shipments made during the prior month; payments 90 days overdue and buyers in financial difficulty. Premium payments must accompany monthly report, and
c. To complete and submit a Proof of Loss (claim) to EXIM in the event of a buyer's non-payment.

RESPONSIBILITIES OF THE EXPORTER

The Exporter Agrees:

1. To ask the Administrator to apply for a Special Buyer Credit Limit for each buyer prior to shipment;
2. To pay premium to the Administrator on the gross invoice amount of all shipments made during the month;
3. To obtain the agreement of the buyer prior to shipment:
a. to purchase designated products;
b. at a fixed price stated in U.S. dollars or other currency acceptable to Eximbank; and
c. upon specified terms of payment and terms of delivery not to exceed 180 days except for certain bulk agricultural products.

4. Not to change any terms of the agreement after shipment or to accelerate or settle any debt unless you obtain Exim's prior approval (voluntary prepayment of debt by the buyer is permitted);
5. To request payment from the buyer in accordance with your customary collection standards; and
6. Not to ship to any buyer who has failed to timely pay his debts;
7. Comply with any requirements indicated in the Country Limitation Schedule and/or SBCL endorsement.

CLAIMS

1. Claims must be filed in accordance with the following time limitations determined by type of loss:
a. Insolvency of Buyer: Claim may be filed at any time after the buyer is declared bankrupt or insolvent but not later than eight months from date of default.
b. Buyer's Default: Claim may not be filed until 90 days after the default but not later than eight months from date of default.
c. Transfer Risk - If there is no waiting period in the Country Limitation Schedule or if the waiting period is less than 270 days, claim must be filed within twelve months from the date of deposit, but not prior to the expiration of the waiting period. If the waiting period is more than 270 days, then claim must be filed within 90 days after expiration of the waiting period.
d. Other political losses - Claim may be filed at any time after default but not later than eight months from date of default.

2. To file a claim, the Administrator must fill out a Notice of Claim and Proof of Loss form and attach copies of relevant document including copy of draft, purchase order, contract of sale, invoice, bill of lading, debt instruments and correspondence with the buyer.
3. When the claim is approved for payment EXIM will ask that you assign to Eximbank your right against the buyer.
4. Eximbank will pay a claim within 60 days after their receipt of the completed Notice of Claim and Proof of Loss. The Payment will be made in U.S. dollars. If you have filled with EXIM an agreement assigning the policy proceeds to a bank, the check wily be made payable to the assignee bank.

ASSIGNMENT

You can assign your right to a claim payment to any financial institution by filing an Assignment Agreement. Your Administrator will assist you with this agreement.

EXPORT INSURANCE SERVICES, INC.
*PREMIUM FEE SCHEDULE

RATES PER $100 OF GROSS INVOICE AMOUNT

CLASS I: SOVEREIGN OBLIGORS OR GUARANTORS: SOVEREIGN LETTERS OF CREDIT (REFER TO APPLICABLE TERM); POLITICAL ONLY TRANSACTIONS: PRE-SHIPMENT COVERAGE: CONSIGNMENT COVERAGE

TERMS OF SALE

RATES
SIGHT LETTERS
OF CREDIT
$.28
S/D D/P; CAD $.31
0-60 DAYS $.50
61-120 DAYS $.65
121-180 DAYS $.80

CLASS II: FINANCIAL INSTITUTION ACTING AS OBLIGOR OR GUARANTOR: NON-SOVEREIGN PUBLIC-SECTOR OBLIGORS OR GUARANTORS: NON-SOVEREIGN PUBLIC-SECTOR LETTERS OF CREDIT (REFER TO APPLICABLE TERM): PRIVATE-SECTOR LETTERS OF CREDIT (REFER TO APPLICABLE TERM)

TERMS OF SALE

RATES

SIGHT LETTERS
OF CREDIT
$.31
S/D D/P; CAD $.35
0-60 DAYS $.58
61-120 DAYS $.76
121-180 DAYS $.95

CLASS III: PRIVATE-SECTOR OBLIGORS OR GUARANTORS

TERMS OF SALE

RATES
SIGHT LETTERS
OF CREDIT
$.---
S/D D/P; CAD $.50
0-60 DAYS $.95
61-120 DAYS $1.14
121-180 DAYS $1.35
181-270 DAYS $1.70
271-360 DAYS $2.08

*The EXIM premium rate has been increased $.20/$100 to cover Administrative Costs.

 

P.O. Box 211837 - Augusta, Georgia 30917-1837
Telephone: (706) 210-4379
E-mail: info@exportinsurance.com

2016 Export Insurance Services, Inc. All Rights Reserved.