Running a business often means taking financial risks. Loans, credit facilities, supplier agreements, and growth funding can all play an important role in keeping a business moving forward.
But many business owners don’t fully realise the personal risk that can come with securing that funding.
If you’ve signed a Personal Guarantee (PG) as part of a business loan or finance agreement, your personal assets – including your home, savings, or investments – could be at risk if the business is unable to repay its debts.
That’s where Personal Guarantee Insurance can provide valuable protection.
What is Personal Guarantee Insurance?
Personal Guarantee Insurance is an annual insurance policy designed to protect directors and business owners who have provided Personal Guarantees in support of business borrowing.
If the business enters insolvency and the lender calls upon the guarantee, the policy can cover a significant percentage of the outstanding liability – helping to reduce the personal financial impact on the guarantor.
The insurance payout is made directly to the lender.
What types of finance can be covered?
Personal Guarantee Insurance can typically be used alongside a wide range of business finance products, including:
- Asset Finance
- Invoice Finance
- Business Loans
- Property Development Finance
- Commercial Mortgages
- Bridging Finance
- Overdraft Facilities
How are premiums calculated?
Premiums are based on the overall financial strength and profile of the business. Underwriters will usually consider factors such as:
- Shareholder funds
- Director experience
- Cash flow performance
- Profitability
- Industry sector
- Existing lender relationships
What does the policy cover?
Personal Guarantee Insurance offers different levels of protection depending on whether the borrowing is secured or unsecured.
Many policies also include valuable support services, such as:
- Up to £10,000 towards professional debt negotiation fees
- Unlimited access to specialist Business Support Services during financial difficulty
- Cover for multiple guarantees under one policy
- Cover for multiple directors at no additional cost where guarantees are signed jointly and severally
Why business owners are paying more attention to PG Insurance
In today’s economic climate, protecting personal wealth has become just as important as protecting the business itself. Many directors are comfortable taking calculated business risks but far fewer realise how exposed they may be personally if things don’t go to plan.
Personal Guarantee Insurance helps create an important financial safety net, offering reassurance that your personal finances, home, and family may have an additional layer of protection if the unexpected happens.
Protect yourself before it becomes a problem
If you’ve taken out business borrowing and signed a Personal Guarantee without insurance in place, now is the time to review your position.
A simple conversation today could make a significant difference to your personal financial security tomorrow.
Get in touch with our team to arrange a quick, no-obligation discussion about how Personal Guarantee Insurance works and whether it could be suitable for your business.
Because protecting your business is important but protecting your personal future matters too.
