Personal Guarantees

Pretty much every lender who lends to any incorporated company will ask for a personal guarantee. Personal Guarantees (or PG’s) mean that if the company cannot repay its borrowings then the guarantor becomes liable for them.

For lenders a PG provides a lot of benefits;

• Statistically, loans with a PG see a lower rate of default
• A PG means that the company cannot be wound up and the loan written off
• A PG means that the lender has something to negotiate with if the borrower fails

There are other benefits, but ultimately nearly every company lender will demand a personal guarantee from the directors (sometimes from other connected parties also).

Personal Guarantee Insurance

One of the biggest surprises to people is that they can take out insurance against the risk of having to pay out on the personal guarantee they have given.

For most directors, a PG will be the biggest liability they have when it comes to their company.

We have heard some advisers say to company directors that they should never give a personal guarantee. In an ideal world, this makes complete sense, however when you need to raise finance and the giving of a guarantee is mandatory then what option do you have? A great compromise could be to mitigate your risk through insurance (please read the legal notice at the bottom of the page).

Lime Consultancy have teamed up with Purbeck Insurance to provide an option to insure against your guarantee liabilities.

Key Questions About Personal Guarantee Insurance (PGI)

Why do I need PGI cover?

Personal Guarantee Insurance provides financial security and protection from the unforeseen. If you’ve ever given Personal Guarantees for loans, then that guarantee could one day be called upon leading to significant costs to you.

What does PGI cover?

Should your Personal Guarantee be called upon by the Lender, the Insurance will be in place to pay out the indemnified amount which may clear your liability to your Lender in full.

How Do I Get a Quote?

It is seriously simple. Click button below and it will take you to the quote screen –

Legal Notice – 

By clicking this link it will take you to the quote and buy website of Purbeck Insurance 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