trade disruption insurance (TDI)

Trade disruption insurance is a political risk insurance (PRI) that covers loss of gross earnings and extra expenses caused by a delay or nonarrival of supplies or stocks arising from foreign government actions or inaction. Such losses can arise from embargoes, expropriation, nationalization, interference with transportation, and similar actions. It is the most commonly written form of PRI and responds to changes in trade regulations or disruptions in trade conditions to either ensure that contracted goods are successfully shipped and paid for or that any resulting losses are compensated. Trade disruption insurance is generally written for short periods of time, from a few days to 2 years. Given the vast volume of world trade, trade insurance also accounts for the substantial majority of a PRI premium.