Asset and Equipment Finance
Equipment finance or Asset Finance is the financing of mobile equipment, where the lender takes security over the actual asset being financed e.g. mining equipment, rigs, ships, aircraft or rolling-stock.
Since the financier has security over the asset, it can usually enforce this security and use the proceeds to repay the debt unless it is unable to take possession of the asset. Consequently equipment finance requires the simplest form of Political Risks Insurance, Repossession Insurance, which covers the lender’s inability to repossess the asset.
A classic example is lease of an aircraft to a foreign airline. If the airline defaults on its lease payments, the lender will seek to repossess the plant and equipment; if it is prevented from doing so by the host government and such refusal to permit repossession lasts for a period in excess of an agreed waiting period (usually 180 days), then the Political Risks Insurance policy would pay a claim.
Meyseys offers Credit Insurance on leases of equipment to commercial and governmental entities, which includes cover for commercial default in addition to default due to Political Reasons.