What is Personal Guarantee Insurance?

Personal Guarantee Insurance protects your personal assets if your business faces insolvency. We have partnered with Purbeck Insurance Services, a specialist in this field, to provide you with a solution that protects your home, savings, and pension if your lender calls in a personal guarantee.

What does it actually cover?

• 80% cover for PGs signed in support of secured finance.
• 60% cover in the first year for PGs attached to unsecured finance, rising to 70% in year two, then 80% in year three and thereafter.
• A maximum level of cover of £550,000 for secured loans and £400,000 for unsecured loans.
• Unlimited access to the Business Support Service, which provides invaluable support during financial difficulties.
• £10,000 cover for a professional debt negotiator to arrange settlement with the lender.
• Cover for multiple Directors on one policy at no extra cost if the PG is signed on a joint and several liability basis.
• Cover for multiple guarantees on one policy.

Personal Guarantee Insurance is available against a wide range of business loans, including invoice finance, asset-based loans, commercial mortgages, peer-to-peer loans, development loans, and more.

How does PG Insurance benefit my client?

1. Risk Mitigation for Business Owners
   • Limits personal liability: PGI reduces the personal financial risk for business owners, directors, or guarantors. If the business defaults, the insurance can cover a significant portion of the outstanding amount, limiting personal exposure to a percentage of the debt—80% of £550k on secured PGs or 60%/70%/80% of £400k on unsecured PGs.
   • Protects personal assets: By mitigating the risk of personal guarantees, PGI helps safeguard the guarantor’s personal assets, such as their home, savings, or other personal property, which would otherwise be at risk in the case of a business failure.
2. Encourages Business Growth
   • Boosts confidence in taking loans: With PGI in place, business owners may feel more comfortable borrowing funds or entering into financial agreements that require personal guarantees. This can enable growth opportunities, expansion, or investments that may have been too risky otherwise.
   • Supports entrepreneurial activity: PGI provides a layer of security for entrepreneurs, encouraging them to take calculated risks in starting or growing their businesses without the fear of losing personal assets.
3. Flexible Coverage Options
   1. Tailored insurance solutions: PGI policies can be tailored to individual needs, allowing for coverage on specific loans or guarantees. The level of coverage can be adjusted based on the size of the loan, the type of guarantee, and the business owner’s risk appetite.
   2. Available for various types of guarantees: Whether it’s a business loan, lease agreement, or supplier contract, PGI can provide protection for a range of personal guarantee obligations.
4. Personal Financial Planning
   • Provides peace of mind: Knowing that personal assets are partially protected allows business owners to plan their finances more effectively, without the constant worry of being personally liable for large debts in the event of business failure.
   • Improves estate planning: PGI can also benefit business owners in their estate planning by preventing personal debt obligations from affecting their family’s financial future.
5. Affordability
   • Cost-effective alternative: Compared to the potential risk of losing personal assets, PGI can be a relatively affordable way to manage personal guarantee risks, especially when spread out over the term of the loan or guarantee.
6. Business Continuity
   • Support during restructuring or insolvency: In the case of business insolvency, PGI may help ease financial pressures and provide additional time for restructuring efforts or asset sales, giving the business a chance to survive or wind down more smoothly.

In summary, Personal Guarantee Insurance helps reduce personal financial risk, improves confidence in business operations, and provides peace of mind for entrepreneurs and directors who need to provide personal guarantees in their business dealings. It is a valuable tool for risk management, especially in today’s volatile business environment.