How much of the guarantee does PGI cover?

Coverage is typically up to 80% of a covered personal payment obligation, subject to policy terms, the deductible, and the policy limit. The remaining share stays with you as the guarantor.

Can I buy PGI after I have already signed a guarantee?

Yes. Coverage can be written for new and existing guarantees, as long as the loan is not already in distress. Underwriters will review the current status of the loan and the business.

Is PGI the same as a surety bond?

No. A surety bond protects the party receiving the obligation, not the guarantor. PGI is the opposite: it protects you, the person who signed the guarantee.

Can You Insure a Personal Guarantee?

Quick Answer

Yes, you can insure a personal guarantee. Personal Guarantee Insurance (PGI) is a specialty product designed to cap personal downside when a business loan guarantee is enforced. Subject to policy terms, conditions, exclusions, and limits, PGI may reimburse a covered portion of a covered personal payment obligation. Premium is underwritten individually based on loan size, industry, and borrower profile.

When a business owner signs a personal guarantee, they accept that a commercial setback can become a personal financial event. If the business cannot service the debt and the lender enforces the guarantee, personal assets are in the recovery path. Many owners assume that exposure is simply part of the deal. It does not have to be.

Personal Guarantee Insurance converts that open-ended downside into a defined, budgetable insurance cost. The policy sits between you and the insurer. Your loan agreement and personal guarantee are unchanged.

What Is Personal Guarantee Insurance?

Personal Guarantee Insurance is a specialty insurance product with a focused purpose: to provide reimbursement to a policyholder when a personal guarantee is enforced and they incur a covered personal payment obligation, subject to policy terms, conditions, exclusions, and limits.

This type of coverage has been available in the United Kingdom and Australia for more than a decade. PGI makes it available to business owners in Canada, with US expansion planned. It is not a general business insurance product, and it is not loan repayment insurance. It is a risk transfer instrument for the guarantor. US business owners can sign up for the newsletter at /contact/ to be notified when US coverage launches.

Standard policies include a 20% deductible structure: the policyholder retains that portion of any covered loss. Coverage is available up to a maximum limit of $1,000,000. Effective maximum indemnity, after the deductible, is $800,000. All figures are subject to policy terms, conditions, exclusions, and limits.

How Does It Work?

The general mechanics:

Apply and get underwritten

You submit the loan details, business financials, and a personal financial statement. Underwriting evaluates risk and determines whether coverage is available and at what premium.

Bind coverage and pay premium

You choose a coverage amount, accept the quoted premium, and the policy is bound. The lender is not a party to this contract and does not need to be notified.

Maintain coverage while the guarantee is in force

PGI is a claims-made policy. Coverage is tied to an active policy period. Renewing annually while the personal guarantee remains outstanding is important. A lapse creates a gap in coverage.

File a claim if the guarantee is enforced

If the lender enforces your guarantee and you incur a covered personal payment obligation, you file a claim during the active policy period. The insurer evaluates the claim against policy terms and conditions.

What PGI Does Not Do

Understanding the limits is as important as understanding the coverage. PGI does not:

Pay the lender directly or guarantee repayment of the loan
Prevent the lender from enforcing the guarantee
Protect against business losses, lost revenue, or operational failures
Cover fraud, voluntary default, or guarantees already in enforcement
Eliminate the co-insurance share retained by the guarantor

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Do not confuse PGI with surety bonds

Surety bonds, credit insurance, and representation and warranty insurance protect different parties against different risks. PGI specifically reimburses the guarantor, the person who signed. No other standard commercial product does the same job.

What Does It Cost?

For a detailed breakdown of the factors that move premium, see our Personal Guarantee Insurance cost guide.

How to Qualify

Underwriting is disciplined but not unusually burdensome. Most applicants provide:

Loan documents

The executed loan agreement or commitment letter containing the personal guarantee.

Business financials

Two to three years of financial statements, plus current year-to-date figures.

Personal financial statement

A summary of personal assets, liabilities, and income.

Credit authorization

Standard soft-pull authorization for the underwriting review. This does not affect your credit score.

Applications on performing loans with current business financials and clean credit are generally strong candidates. Coverage is not available for guarantees on loans already in default or active enforcement. Jurisdiction-specific eligibility requirements apply. For answers to common questions about coverage, eligibility, and timing, see the Personal Guarantee Insurance FAQ.

Common Questions

Yes. Personal Guarantee Insurance is a specialty product that may reimburse a covered portion of a covered personal payment obligation when a lender enforces your guarantee. It is legally separate from the loan agreement and does not require lender involvement or approval.

Standard PGI policies include a 20% deductible, meaning the policyholder retains that portion of any covered loss. Coverage is available up to a maximum limit of $1,000,000. Effective maximum indemnity is $800,000. All figures are subject to policy terms, conditions, exclusions, and limits.

No. The policy is a contract between you and the insurer. Your loan agreement and personal guarantee are unchanged by the existence of the policy.

Coverage may be available for existing guarantees on performing loans, subject to underwriting review of current loan status, business financials, and other factors. Coverage is not available for guarantees on loans already in default.

No. A surety bond protects the party receiving an obligation, not the person who gave it. PGI is the opposite: it protects you, the guarantor. For a full structural comparison, see our article on PGI versus surety bonds.

The Bottom Line

Yes, you can insure a personal guarantee. Personal Guarantee Insurance is a real, licensed specialty product that may reimburse a covered portion of a covered personal payment obligation when enforcement occurs, subject to policy terms, conditions, exclusions, and limits.

It does not eliminate the guarantee, pay the lender directly, or protect against every possible scenario. It is a risk transfer instrument that caps the personal downside on a defined, named obligation. For business owners carrying significant personal guarantee exposure, it is worth understanding what the product does and whether it fits your situation.

Sources and References

This article draws on publicly available guidance from small business authorities and established financial resources.

U.S. Small Business Administration. 7(a) loans. https://www.sba.gov/funding-programs/loans/7a-loans
Investopedia. Personal Guarantee: Definition and Role in Loan Requirements. https://www.investopedia.com/terms/p/personal-guarantee.asp
Business Development Bank of Canada. Personal guarantee: What business owners need to know. https://www.bdc.ca/en/articles-tools/money-finance/get-financing/personal-guarantee-what-you-need-to-know