As the downturn continues, more businesses are buying insurance to protect themselves if customers don't pay their bills, says a provider of the coverage.

"Since the beginning of the crisis, U.S. companies are realizing that although they thought" their trade receivables were secure, "there are risks all over the place," said Francoise David, chairman of Coface, a unit of French bank Natixis (KN.FR) and the second-largest provider of credit insurance in the U.S.

Credit insurance, which guarantees payment of a company's trade receivables, has been much slower to catch on the U.S. than in the European Union, where longer payment cycles have made the coverage more popular. But the weak economy has driven up applications for coverage from U.S. companies by 59% last year, David said.

Customers range from manufacturers to advertising agencies. The cost for coverage is typically around two-tenths to three-tenths of one percent of sales. If Coface sees a pattern of non-payment by a particular company, it may step in and notify its customers that sell to that company that it will no longer cover those receivables.

European insurers dominate the market, but some U.S. insurers offer the coverage too, David said. Euler Hermes Group, a unit of Allianz SE (AZ), is generally considered to be the market leader. Some U.S. insurers, including American International Group (AIG) offer the coverage.

In 2008, total U.S. credit insurance premiums were about $800 million, compared with $6 billion for the E.U., according to figures collected by Coface.

-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750-4141; lavonne.kuykendall@dowjones.com