2 min read
Definition
Personal guarantee insurance is a policy a company director takes out to cover some of their liability under a personal guarantee. If the company defaults and the lender calls the guarantee, the policy pays a percentage of the amount demanded — typically rising over the first year or two of cover — directly to the director rather than the lender.
What it costs and covers
The premium is an annual cost the director pays personally, priced as a percentage of the guaranteed sum, and the payout is usually capped well below 100% — so it softens a called guarantee rather than removing the exposure. Excesses, exclusions and qualifying periods all apply. It is, in effect, an extra bill you carry for the privilege of having signed your personal assets over to a lender.
Why company-only lending sidesteps it
PGI only exists because personal guarantees do. Remove the guarantee and there is nothing to insure, and no premium to pay. Credicorp lends to the company, assesses the company's own trading position, and takes no personal guarantee — so a director never needs to insure against a liability they were never asked to give. See no personal guarantee loans and how no-personal-guarantee lending works.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.