What is a credit limit?

What is a credit limit?

A credit limit is the maximum amount up to which the insurer accepts the commercial risk (payment risk) for the debtor.

Based on the credit limit, the maximum claim amount is defined that the credit insurer will cover in the event of a claim. The insurer will pay an indemnity in proportion to the percentage of the credit limit covered.

If your outstanding balance exceeds the limit, you will not be covered for the part that exceeds the limit.