Quick Answer

PGI premiums are priced between 2.75% and 3.25% of the coverage amount, depending on the policyholder's risk profile. Coverage is available up to a maximum limit of $1,000,000, subject to a 20% deductible. Effective maximum loan indemnity is $800,000. All coverage is subject to policy terms, conditions, exclusions, and limits. Underwriting determines final pricing for each application.

The first question most business owners ask is what Personal Guarantee Insurance costs. The answer is a range with defined parameters, because PGI is underwritten like any specialty insurance line. The rate depends on the specific loan, the business, and the guarantor.

Below is how the pricing works, what moves it, and how to think about the cost relative to the exposure it caps.

The Approved Pricing Range

PGI premiums are priced between 2.75% and 3.25% of the coverage amount, depending on the policyholder's risk profile. Coverage is available with no minimum, up to a maximum limit of $1,000,000, subject to a 20% deductible. Effective maximum loan indemnity is $800,000.

All coverage is subject to policy terms, conditions, exclusions, and limits. The published range is not a quote or an offer. Underwriting determines final pricing for each application. Do not present these figures as a guaranteed rate for your specific situation before underwriting is complete.

What the numbers mean in practice

On a $500,000 coverage limit, the annual premium would fall between $13,750 and $16,250, depending on risk score. After the 20% deductible, effective indemnity on that policy is $400,000. These are illustrative figures only. Your underwritten premium may differ.

How PGI Pricing Works

Premium is calculated on the guaranteed amount and adjusted based on risk factors the underwriter assesses. The rate range reflects the spread between the most and least favorable risk profiles within the underwriting appetite.

Larger guarantee amounts often produce a more favorable rate per dollar. Strong business financials, established industries, and conservative loan structures typically price toward the lower end. Leveraged acquisitions, cyclical industries, and earlier-stage businesses price accordingly.

What Drives Premium

Six factors move pricing within the range:

💰
1. Coverage amount

Larger coverage amounts generally produce a more favorable rate per dollar, consistent with how most specialty insurance lines are structured.

📈
2. Business financials

Revenue, profitability, cash flow coverage, and debt service coverage ratio. Businesses with stronger financial performance present a different risk profile than those with thinner margins.

🏢
3. Industry

Industries with more stable revenue profiles and lower historical default rates typically price differently than cyclical or higher-turnover sectors.

📄
4. Loan type

SBA 7(a) loans in the United States, CSBFP loans in Canada, conventional term loans, and acquisition financing each carry different risk characteristics that affect underwriting.

👤
5. Guarantor profile

Personal credit history, net worth, liquidity, and relevant industry experience are considered as part of the underwriting review.

⚙
6. Coverage structure

The deductible amount and policy limit affect premium. A higher retained share generally produces a lower annual cost.

How to Think About the Cost

Most owners compare the premium to the exposure it caps. The annual premium is a fraction of the maximum coverage amount it provides. Origination fees, legal costs, and interest payments on the same loan are typically larger expenditures.

PGI converts an open-ended personal liability into a defined, annual line item. For operators who manage their balance sheet with discipline, that trade is comparable to other professional risk costs they carry.

The premium is a known, finite cost. The exposure it caps is an open-ended risk. That is the whole structure of the trade.

For a practical analysis of whether the trade makes sense for your situation, see Is Personal Guarantee Insurance Worth It.

Ways to Lower Your Premium

  • Increase the retained deductible. A higher self-insured retention reduces the annual premium, because the policyholder absorbs more of the first loss.
  • Choose a lower coverage limit. Insuring a smaller portion of the total guarantee reduces the premium proportionally.
  • Apply before closing. Applications submitted before the loan closes often allow the underwriter to assess a cleaner set of facts and may support a more favorable rate.
  • Maintain strong business metrics. Improving the business's debt service coverage ratio or strengthening the personal financial profile can support a better pricing outcome at renewal.

Getting a Quote

A formal underwriting indication typically requires the loan documents, recent business financial statements, and a personal financial statement. The underwriter returns coverage options at different deductibles and limits. No obligation arises until you accept a quote and bind coverage.

Start a quote at PGI or contact hello@pgicover.com to begin.

Common Questions

PGI premiums are priced between 2.75% and 3.25% of the coverage amount, depending on the policyholder's risk profile. Coverage is available up to a maximum limit of $1,000,000, subject to a 20% deductible. Effective maximum indemnity is $800,000. All figures are subject to policy terms, conditions, exclusions, and limits. Underwriting determines final pricing for each application.
When the premium is paid by the business for a guarantee on business debt, it is commonly treated as a deductible business expense. Tax treatment depends on your jurisdiction and specific facts. Confirm with a qualified tax advisor.
PGI policies are generally written on an annual basis. Premium frequency and structure are subject to the terms of the specific policy.
The lower end of the range reflects strong financial profiles, conservative loan structures, and established industries. Leveraged transactions, younger businesses, or cyclical industries present a higher risk profile that underwriters price accordingly.
The initial underwriting review typically uses a soft credit inquiry, which does not affect your credit score. Confirm the specific inquiry type with your underwriter.
If the underlying personal guarantee is released, the policy may be cancelled subject to the policy terms. Pro-rated return of premium may be available in some circumstances.
The Bottom Line

PGI premiums are priced between 2.75% and 3.25% of the coverage amount, depending on the policyholder's risk profile. Coverage is available with no minimum, up to a maximum limit of $1,000,000, subject to a 20% deductible. Effective maximum loan indemnity is $800,000.

Underwriting determines final pricing. The published range establishes the parameters, not the quote. For most owners with meaningful guarantee exposure, the annual premium is a defined cost that is substantially smaller than the open-ended personal exposure it caps.

Sources and References

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

  1. U.S. Small Business Administration. 7(a) loan program. https://www.sba.gov/funding-programs/loans/7a-loans
  2. Investopedia. Personal Guarantee: Definition and Role in Loan Requirements. https://www.investopedia.com/terms/p/personal-guarantee.asp
  3. Federal Reserve. Small Business Credit Survey 2024. https://www.fedsmallbusiness.org/