Personal Guarantee Insurance
Up to 80% protection available for personal assets pledged under a personal guarantee.
Invest in your business with confidence – Personal Guarantee Insurance covers your personal guarantees.
Invest in your business with confidence – Personal Guarantee Insurance covers your personal guarantees.
A Personal Guarantee is – in a nutshell – a person’s promise to repay credit issued to their business and is typically signed by director(s) or owner(s) during the loan application process. It’s a legally binding contract.
If the business becomes unable to repay this debt at any point, then the individual(s) who has signed the personal guarantee may become personally responsible for the debt. The lender may call on the personal guarantee to cover any outstanding debts and will go after the guarantor’s personal assets, such as their home. If personal assets don’t cover the debt, the individual could be declared bankrupt.
As we all know, not all businesses succeed and, as a result, not all debt is paid back. The personal guarantee is therefore seen as “added security” for lenders.
Few SMEs have enough cash within their organisation to self-fund growth. So personal guarantees can be a very useful method of securing crucial business finance that an SME may not have been able to secure otherwise, and could help propel a business forward.
Personal Guarantee Insurance (PGI) is business insurance that is designed to protect business owners/directors’ personal assets in the event that they must sign a personal guarantee when their business takes out a loan.
When you, as a business owner or director, sign a personal guarantee, you’re putting your personal assets on the line, most notably your home. If your business can no longer repay the loan you took out, you, and potentially your family, could suffer as a result.
This is where Personal Guarantee Insurance comes in. You’ll have cover for up to 80% of your loan amount, allowing you to invest in your business with confidence.
There are many unforeseen circumstances that can have adverse effects on your business and your bottom line, many of which are out of your control, making it essential that you protect your assets and your family’s future.
PGI can be tailored to each individual, so you can state the amount you want to insure, and you can choose how many directors you’d like to be noted on the policy. Purchasing this insurance policy will help to reduce the risk to your personal estate, leaving you to get on with running your business.
Get your Personal Guarantee Insurance quote today
It’s the only way to protect yourself and your family in the event your business cannot pay its debts.
Invest with confidence
Businesses need capital in order to succeed. PGI allows you to take out the loans you need to grow, all while protecting your personal assets.
Protect up to 80% of your loan amount
Cover a significant sum and ensure that this bill doesn’t land at your feet if your business becomes insolvent.
Secure your family’s future
Following insolvency, a demand made under the personal guarantee can have a detrimental impact on your personal assets. Don’t take the risk, find out about how Purbeck can help.
Here’s everything you need to know about PGI before you decide to take out a policy.
Personal Guarantee Insurance (PGI) is designed to protect a director's or business owner's assets in cases where they have signed a personal guarantee for a business loan and the business is unable to repay it.
This type of insurance shifts part of the financial burden associated with personal guarantees from the director to the insurance provider and this works on a co-insurance basis. PGI policies can cover a range of finance types, including secured loans, unsecured loans, asset finance, commercial mortgages, business credit cards and overdrafts.
By holding a PGI policy, business owners and directors have a safeguard that covers a percentage of the personal guarantee amount based on factors like loan type (whether it’s secured or unsecured) and the length of time the policy has been held.
This financial protection can be crucial for directors and SME owners in high-risk sectors, allowing them to focus on business growth without the constant worry of personal financial loss.
PGI is valuable for any business owner or director who has personally guaranteed a loan, particularly those operating in high-risk industries or SMEs seeking finance.
Directors' guarantees are common in business lending, and PGI serves as a safety net for directors who have put their personal assets on the line for their business.
PGI offers tailored protection based on the type of loan. For secured loans, PGI provides coverage of up to 80% of the personal guarantee amount, while for unsecured loans, the coverage increases progressively over time, starting at 60% in the first year, rising to 70% in the second year, and reaching up to 80% from the third year onward.
This incremental approach ensures that directors and SME owners benefit from expanding protection as their loan matures. The maximum protection available under PGI is £550,000 for secured loans and £400,000 for unsecured loans.
The premium for a PGI policy is calculated as a percentage of the full amount of the personal guarantee. Premium rates typically range from 1.6% to 5.20% annually. The exact rate depends on various factors, including the business’s sector, its credit score, the type of loan (secured or unsecured), the lender’s requirements, and the applicable Insurance Premium Tax (IPT).
By factoring in these elements, PGI providers tailor the policy to the unique needs of each director or business owner, ensuring an appropriate level of protection.
We can include multiple guarantees on your Policy if you have two or more guarantees in place.
Personal Guarantee Insurance is available for personal guarantees provided by directors of limited companies or partners of limited liability partnerships located in the United Kingdom.
Personal Guarantee Insurance is available against Personal Guarantees provided against a wide range of business loans, including both secured loans and unsecured loans.
A secured loan is where the lender has taken security in the form of your company’s assets. They have a contractual right of recovery over your assets in the event that you cannot pay your debts.
Secured loans include:
An unsecured loan is where the personal guarantee and any associated charges over personal assets are the only security the lender has taken.
Unsecured loans include:
We are at your side and here to help.
Your business may at any time suffer from any one of a number of financial or trading difficulties. It is important that we are notified as soon as you become aware of any of these - we call them “notifiable events”.
You need to read your policy carefully to ensure you are aware of all such situations, some examples of notifiable events include:
When you make us aware of a notifiable event we will introduce you to our Business Support Services.
It is in our best interests to support you with any financial issues your business faces. We are committed to working with you to ensure that your business continues to be successful.
The Business Support Service may help you by introducing you to specialist companies in:
The Business Support Service is available to you and not just following a notifiable event. Purbeck receive no incentives for introducing you to these services. We believe they will help strengthen your business and they are businesses we trust.
The annual renewal process is simple and straightforward, enabling you to focus on your business. By renewing your annual Personal Guarantee Insurance policy, you will ensure that the cover remains in place across the duration of the financial commitments.
45 days prior to renewal, you will be provided with an email link to renew your application. You will be asked to confirm your original application details and apply for renewal.
Please note, renewal of your policy will be subject to your circumstances at that time and the insurance may be subject to periodic change.
You will have the opportunity to review the Policy Summary and Key Facts Information prior to purchasing Personal Guarantee Insurance. These documents set out the significant features, exclusion and important information relating to the Policy.
If you wish to review the documentation before you apply, please follow the relevant links below:
Get your Personal Guarantee Insurance quote today
It’s the only way to protect yourself and your family in the event your business cannot pay its debts.
Get your Personal Guarantee Insurance quote today
It’s the only way to protect yourself and your family in the event your business cannot pay its debts.