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What is a Limit of Discretion (LOD)?

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This term is used in the Trade Credit Insurance industry and varies from insurer to insurer (in respect to the details), but the basic outline remains the same. A limit of discretion is the maximum amount of credit that a credit provider may grant to an individual buyer (commercial or consumer), under the cover of your Trade Credit Insurance Policy, without first obtaining the approval from the Insurer. The amount and conditions attached to this limit is defined within the Trade Credit Insurance policy. Generally, this is done to save time, since the process of getting approval on every single buyer, regardless of level of credit, would take a significant amount of time to process slowing down the ability to open new accounts.

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