Insurance architecture

Insurance is a core part of how Trade Dollar protects deployed capital. It works at defined layers, and it is important to be precise about what it covers.

Cargo insurance on each trade. Every financed metals parcel carries cargo insurance in excess of the cargo value on every parcel (currently 110%), placed with an A-rated insurer in a leading market. The financing vehicle that holds title to the goods is the named loss payee, which means any insurance payout flows directly to that vehicle, and through it to the vault, regardless of the supplier's financial condition. To be clear: this is insurance on the physical goods, not insurance on your deposit. It is not depositor insurance.

What insurance does and does not cover. Cargo insurance covers physical loss or damage to the goods. It does not cover a fall in the goods' market price. Fraud is addressed by prevention, not carried by the policy: digital title plus custody control, alongside verified identities, independent inspection, and tamper-evident DWRs. See Risks.

Trade-credit insurance on the receivables product. The receivables variant (see What Trade Dollar is) is secured by an assigned receivable rather than by goods. It carries trade-credit insurance covering buyer non-payment, from an A-rated insurer to be appointed. The financing vehicle is the insured.

The insurance reserve. Part of the performance fee funds an insurance reserve intended as a first-loss buffer for LPs: a pool that absorbs certain losses before they reach LP capital. Until its size, funding rate, and payout rules are published, treat it as a planned protection, not a sized one.

Risk transformation by specialist underwriters. Specialist underwriters assess each trade against established scorecards, looking at the type of commodity, the origin, the route, the storage, and the counterparty. That assessment feeds directly into how much the vault will advance and on what terms. This is how a physical commodity position is turned into a structured, insurable risk.

Claims and enforcement. Because the financing vehicle is the named loss payee, its right to claim does not depend on the supplier. If goods are lost or damaged, the vehicle submits the documents (inspection reports, assays, warehouse receipts, bills of lading) directly to the insurer. This independence from the supplier is a key part of the non-credit model: recovery runs through insurance and physical control, not through a supplier's insolvency.

Where insurance can fail. Insurance is a protective layer, not absolute protection, and its failure modes are planned for. A claim can be disputed or denied where an exclusion applies; the exact perils and exclusions come from the bound policy, and fraud in particular is handled by prevention rather than carried by the policy. An insurer can itself fail; cover is placed at an A-rated floor to keep that risk low. A peril can sit outside the cover entirely; the policy schedule is reviewed against the deal book to find gaps early. And a payout can be contested over routing; the financing vehicle is the consistently named loss payee across the trade documents, so the claim path does not depend on the supplier. None of this removes the residual risk that a claim pays late, pays partially, or does not pay.