Individuals and businesses may seek various types of insurance or financial protections to mitigate the risks associated with bankruptcies.
Trade Credit Insurance for Businesses
Companies that engage in trade and extend credit to customers may opt for Trade Credit Insurance. This type of insurance protects businesses from financial losses in case their customers are unable to pay their debts due to bankruptcy or other financial difficulties.
Investors and Creditors
Individuals or institutions that invest in corporate bonds or lend money to businesses may face risks if the borrower goes bankrupt. Some financial instruments, like credit default swaps, are used to hedge against the risk of default.
Income Protection for Individuals
Individuals, especially those with significant financial responsibilities such as mortgages or family support, might consider Income Protection Insurance. This coverage can provide financial support if the individual experiences a loss of income due to factors like job loss, disability, or illness.
Bankruptcy Attorney Liability Insurance
Attorneys who specialize in bankruptcy law may carry professional liability insurance to protect themselves from legal claims and lawsuits related to their services.
Directors and Officers (D&O) Liability Insurance
Executives and officers of companies may obtain D&O insurance to protect themselves from personal losses in case the company faces bankruptcy and stakeholders allege mismanagement or other wrongdoings.