Personal Guarantee Insurance (PGI)

A personal guarantee is a legally binding commitment to repay a business debt personally if your company can't. Most lenders ask for one when financing an incorporated business, particularly if the company is relatively new or the loan is significant. You've probably been asked to sign one already, or you're weighing up whether to.

Once you've signed, the limited liability protection that normally sits between your personal finances and your business stops applying to that particular debt. If your company defaults, the lender can come after you directly. That's your home, your savings, your investments. It's a heavy burden to bear, and it's worth understanding fully before you put pen to paper.

Personal guarantee rules also vary across Canada, which catches a lot of directors off guard. Alberta has its own notarisation requirements. Ontario has specific protections around the matrimonial home. Quebec operates under civil law rather than common law. These differences affect how guarantees are structured and enforced, so getting advice that's specific to your province really does matter.

Why Purbeck?

Personal Guarantee Insurance is a specialist policy that covers a significant percentage of your personal guarantee liability if your business becomes insolvent and your lender calls on the guarantee. It works on a co-insurance basis. You keep a share of the risk, but it puts a meaningful buffer between you and the worst outcome. Think of it as the safety net that lets you invest in your business without betting everything on it.

Purbeck PGI is underwritten by Markel International, an A-rated global insurer. If a claim needs to be made, Purbeck manages the whole process, and Markel pays the covered amount directly to the lender. You won't be left to handle it alone at what would already be an incredibly difficult time.

Cover is available across a wide range of finance types, including secured loans (such as commercial mortgages and asset finance), and unsecured facilities (which include overdrafts, business credit cards and short-term working capital loans).

It also doesn't matter if you've already signed your guarantee; we can cover existing ones, too. When you apply, we'll ask where you're based and make sure the cover we put in place reflects the rules in your province.

How does Personal Guarantee Insurance work?

When you take out a PGI policy, you're insuring a set percentage of your personal guarantee liability. If your business enters insolvency and the lender makes a demand under the guarantee, Purbeck manages the claim, and Markel International pays the covered amount directly to the lender. You don't have to handle the lender conversation alone.

The level of cover depends on whether your loan is secured or unsecured, and how long the policy has been running. For secured loans, you're covered up to 80% of the guarantee amount from day one. For unsecured loans, cover starts at 60% in year one, rises to 70% in year two, and reaches 80% from year three onwards.

We always say the same thing to directors: don't wait until things are difficult to think about this. The earlier you put cover in place, the better protected you are.

Who needs Personal Guarantee Insurance?

Honestly? You need PGI if you're a director or business owner who has signed a personal guarantee.

Without insurance, have you thought through what happens if the business hits serious difficulty?

PGI covers founders who have guaranteed growth capital, directors who have signed against a commercial property mortgage held through a limited company, and business owners juggling multiple guarantees across different lenders.

If you've signed a personal guarantee and the answer to "what happens to my home if this goes wrong" isn't immediately clear, that's exactly the conversation we're here to have.

What does Personal Guarantee Insurance cover and what is the maximum cover available?

PGI covers a percentage of the outstanding amount owed under your personal guarantee at the point of an insolvency event. For secured loans, that's up to 80% of the guarantee amount. For unsecured loans, cover increases from 60% in year one to 70% in year two and 80% from year three onwards.

On the facilities side, eligible secured lending includes commercial mortgages, asset finance, invoice finance and qualifying peer-to-peer loans.

For unsecured loans, we cover business credit cards, overdrafts, short-term working capital loans and peer-to-peer loans. If you're not sure whether your facility qualifies, just ask us; that's what we're here for.

How is Personal Guarantee Insurance calculated?

Your premium is calculated as a percentage of the full personal guarantee amount, with rates typically ranging from 1.6% to 5.20% annually.

The rate that applies to you will depend on things like your business sector, your credit profile, whether the loan is secured or unsecured, and what your lender requires.

Provincial premium tax also applies, and the rate varies depending on where you're based; we'll always confirm that figure clearly when we provide your quote, so you know exactly what you're paying and why.

Can I insure multiple personal guarantees?

Yes, absolutely. If you have two or more guarantees in place across different facilities or lenders, we can bring them all under one policy. No need to manage multiple separate policies.

Can I have more than one guarantor on a policy?

Where a guarantee has been signed by two or more directors on a joint and several basis, we can add all of them to the same policy at no extra cost, up to a maximum of five directors.

It's a sensible option for businesses where multiple founders have each signed personally, which is more common than you might think.

Personal Guarantee Insurance

Up to 80% cover for directors and business owners who have personally guaranteed a business loan.

What is a Personal Guarantee?

The Benefits of Personal Guarantee Insurance

What is Personal Guarantee Insurance (PGI)?

Here's What You Need to Know