Personal Guarantee Insurance

Personal Guarantee Insurance gives you “peace of mind” as it is designed to actively safeguard your business interests and provide insurance cover if your Personal Guarantee (PG) is called upon by your lender.

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When business owners or directors of small to medium enterprises (SMEs) secure a loan, invoice financing or overdraft from banks and other lending institutions a “Personal Guarantee” is usually required as extra security and ‘sits’ behind a debenture and a fixed and floating charge.

A personal guarantee is a contract by which someone promises to pay any deficiencies on a specific loan or account which cannot be met by the principal debtor. Most guarantee forms require joint and several liability, meaning that each individual who signs a guarantee can be held responsible for the whole amount of the loan.

Consequently, even if someone is only a 10 percent owner in the business, that person is personally liable for 100 percent of the amount being guaranteed. The guarantors can be sued individually or all together. There is no requirement that, before the guarantor can be held responsible, the lender must show that the borrower actually named in the loan document, e.g., the business, has been asked to repay the loan. In effect, when a personal guarantee is signed, the signer becomes personally liable for the loan, even if the business is incorporated.

Personal Guarantee Insurance is tailored for Directors who are exposed by having provided Personal Guarantees (PG), by indemnifying a set proportion of the liability.

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By clicking this link it will take you to the quote and buy website of PGI Cover a trading style of Ratae PGI Ltd an appointed representative of Professional Insurance Agents Ltd who are authorised and regulated by the Financial Conduct Authority. They will be able to help and quote you on various insurance products – we do not offer advice or services in this area of Insurance.