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Understanding whether Personal Guarantee Insurance is Right for You

Posted by Todd Davison on Nov 16, 2023 3:38:30 PM

While a personal guarantee can be the golden ticket in helping you secure crucial funding for business ventures or expansion, it can present an enormous risk to your assets.

That’s why Personal Guarantee Insurance is a vital tool to anyone involved in a financial agreement or loan, serving as a safety net for your savings, investments, and property.

In this blog, we’ll delve into the key aspects of Personal Guarantee Insurance, helping to determine if it’s the right choice for you.


What is Personal Guarantee Insurance

Personal Guarantee Insurance, or PGI is a type of insurance designed to protect individuals who have provided a personal guarantee for a business loan or other financial agreement.

A personal guarantee is a commitment made by that individual to take responsibility for the financial obligations of a business if they default on the repayments.


Why is securing PGI important?

The reason why obtaining PGI is essential for those involved in a financial agreement is that it shields your personal assets from being at risk in the event of business failure or loan default.

Without this added level of protection, you could potentially face significant financial consequences, including the loss of your savings, investments and even your home.

PGI provides peace of mind and allows you to pursue business opportunities with the confidence of knowing that your personal assets are safeguarded.


Who would benefit from having PGI?

PGI can be beneficial to a number of individuals involved in business-related financial agreements, including:

-    Small business owners

Small business owners often need to provide personal guarantees to secure loans or financial agreements. PGI offers them a layer of protection ensuring that their assets are not jeopardised in the event of business difficulties.


-    Entrepreneurs

Individuals venturing into new business opportunities may find themselves in situations where personal guarantees are required. PGI is especially valuable for entrepreneurs, providing them with the security they need to take calculated risks.


-    Investors

Investors who have a stake in business and have provided personal guarantees may benefit significantly from PGI. It ensures that their investment remains protected, allowing them to diversify their portfolios without concerns about personal financial liability.


-    Business directors, partners, or co-signers.

Anyone involved in financial agreements, such as co-signers or partners, will find PGI valuable for mitigating the potential risks of such agreements.


What are the risks of not having PGI?

The primary risk of not having PGI is the potential for personal financial liability. In the absence of PGI, if the business encounters any difficulties and is unable to meet its financial obligations, you could be held personally responsible. This means your assets from your savings to your property are at enormous risk.


Evaluating your financial situation

The advantage of PGI from Purbeck is that it can be secured for new or existing financial agreements. Before securing PGI, it’s essential to assess your current financial situation.

First, you need to consider your assets, liabilities and the potential risk associated with your business or financial agreements.

This will help you to determine the right level of coverage you need to adequately protect your personal assets. At Purbeck, we can cover up to 80% of your risk, safeguarding your assets as you invest in your business endeavours.


Future financial protection

PGI not only provides immediate protection but also offers long-term benefits for your financial security. It allows you to pursue business opportunities with confidence, knowing that your personal assets are shielded. This can give you the peace of mind you need to pursue more ambitious ventures, contributing to your overall financial growth and stability.


Personal Guarantee Insurance from Purbeck

PGI is the ultimate financial tool for ensuring your personal assets remain protected.

If you’re unsure whether PGI is the right choice for you get in touch with the team at Purbeck today for more information on our process and the many benefits.

Don’t leave your personal assets at risk, secure the protection you need for your future financial endeavours.

Get in touch

For more information or to speak to one of our underwriters contact us today.

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