Hi! I'm CORE (Client Optimized Risk Engine). I'm trained in PGI product knowledge. Ask me anything.
About PGI
Personal guarantee insurance (PGI) is a specialty insurance product that may reimburse the insured for a covered portion of a personal guarantee obligation when a business defaults on a loan and the lender enforces the guarantee. Your personal guarantee with the lender stays in place. PGI is a separate contract between you and the insurer that pays out if that guarantee is ever called.
You apply for coverage against a specific personal guarantee. Underwriters review the loan, the business, and your personal profile, then issue a quote. You bind coverage by paying the premium. If your business defaults and the lender formally demands payment under the guarantee, you file a claim. Subject to policy terms, the insurer may reimburse a covered portion of that personal payment obligation.
Personal guarantee insurance has existed in the United Kingdom and Australia for more than a decade, typically placed through Lloyd's syndicates. PGI is the first dedicated carrier to bring this product to North America, with coverage currently available for Canadian borrowers and US expansion in progress. The specialty underwriting expertise remains concentrated in a small number of carriers and brokers worldwide.
PGI is designed for any business owner who has signed, or is about to sign, a personal guarantee on a business loan. Currently available to CSBFP borrowers in Canada, entrepreneurs acquiring businesses through ETA or M&A financing, founders scaling with term debt, and operators with lines of credit or equipment loans. US coverage for SBA borrowers is coming, with launch planned. Learn more on the hub page.
The product itself is not new. PGI has been available in the UK and Australia for over a decade. What is new is its availability in North America. PGI launched to serve Canadian borrowers who previously had no way to hedge the open-ended personal exposure created by a personal guarantee, with US expansion planned. Read the launch story.
Cost and Coverage
PGI premiums are underwritten individually. They scale with the guaranteed amount and vary based on loan type, industry, deal structure, and borrower profile. Strong balance sheets on conservative debt price lower. Leveraged acquisitions and cyclical industries price higher. Use the CORE Score flow to get an indicative quote for your specific situation.
PGI covers a defined portion of your covered personal payment obligation when a lender enforces the personal guarantee. It does not pay the loan off or cure the default. It reimburses you as the guarantor for the amount you become personally liable for, subject to the deductible, co-insurance share, and policy limit. Coverage is triggered by formal enforcement, not by the business missing a single payment.
Subject to policy terms, PGI may cover up to 80% of the covered personal guarantee amount. The guarantor retains the balance, typically split between a deductible and a co-insurance share. That structure is standard for specialty reimbursement insurance and keeps the guarantor aligned with the lender on recovery efforts.
The claim pays up to the policy limit, less the deductible and any co-insurance retained by the guarantor. For a $1 million guarantee with 80% coverage, a $50,000 deductible, and a full enforcement event, the reimbursement would be 80% of the enforced amount above the deductible, capped at the policy limit. Your specific policy will list exact numbers.
Most PGI policies are written annually and renewed each year until the underlying guarantee is released. Some carriers offer multi-year policies on specific deals. Coverage is claims-made, which means a claim must be reported while the policy is in force. Lapsed coverage means lost protection, so renewals matter. See the cost guide for pricing detail.
Eligibility and Application
Most business owners with a performing loan and clean personal credit are candidates. Underwriters look for a business generating sufficient cash flow to cover debt service, a guarantor with reasonable credit and liquidity, and a loan that is not already in distress. Declines usually track with loans showing covenant issues or businesses already in workout.
PGI may cover personal guarantees on SBA 7(a) and 504 loans, CSBFP loans, conventional bank term loans, commercial real estate financing, equipment loans, lines of credit, acquisition financing for M&A and ETA, and certain mezzanine structures. Availability depends on jurisdiction and deal profile. Unusual structures are still often reviewed case by case.
Yes, and SBA borrowers are one of the clearest use cases. SBA 7(a) loans require an unlimited unconditional personal guarantee from every owner with 20% or more equity. That requirement cannot be negotiated. PGI sits alongside the SBA guarantee and reimburses a covered portion if the guarantee is enforced. See the SBA 7(a) guide.
You submit the loan commitment letter or loan agreement, two to three years of business financials plus year-to-date, a personal financial statement, and a soft-pull credit authorization. Underwriters review the debt service coverage ratio, industry, collateral, and guarantor profile. The CORE Score evaluates the deal and produces an indicative premium. A full quote typically follows within days.
The CORE Score takes about two minutes online. Full underwriting with documents takes a day or two once financials and loan documents are submitted. Binding coverage is digital where available. Most applicants can go from first inquiry to bound policy within a business week. Download the app.
How PGI Compares
A surety bond protects the party receiving the obligation, usually a lender, owner, or contract counterparty. If the principal defaults, the surety pays the beneficiary and then pursues the principal for reimbursement. PGI works the opposite way. It pays the guarantor directly when the guarantee is enforced. PGI is the only widely available product that reimburses the person who signed the guarantee. Full comparison.
Life insurance pays out on death. It can indirectly cover a personal guarantee if the estate uses proceeds to settle the debt, but it does not protect a living guarantor from enforcement. PGI covers the living guarantor. If the lender calls your guarantee while you are alive and well, life insurance does nothing. PGI may reimburse a covered portion of the enforced obligation.
Collateral and a personal guarantee stack. Most commercial loans require both. Pledging more collateral does not reduce the guarantee. PGI hedges the guarantee itself, so it fills the gap that collateral cannot. If the lender takes your business assets and still has a shortfall, the personal guarantee covers the rest. PGI may reimburse a covered portion of that shortfall. See collateral vs PGI.
Yes, when possible. Limited guarantees, burn-off provisions, and carve-outs are worth pursuing on conventional loans. But many programs, especially SBA 7(a), do not allow negotiation. And even when you can negotiate, lenders rarely agree to zero personal exposure. PGI is the most direct way to cap whatever guarantee remains after negotiation. Negotiation guide.
Claims and Payouts
As soon as the lender formally demands payment under your personal guarantee. The trigger is enforcement, not missed payments by the business. Once you receive the demand letter or equivalent formal notice, notify the insurer promptly. Delayed notice can jeopardize coverage under a claims-made policy. Our claims team handles documentation and coordinates with your counsel.
Simple, well-documented claims typically resolve within weeks. Complex enforcement events with litigation, multiple guarantors, or contested amounts can take longer. The claim is evaluated against the policy wording, the deductible, the co-insurance share, and the policy limit. Once approved, payment is made directly to the insured guarantor.
A payout is triggered when the business defaults, the lender formally demands payment under the personal guarantee, the policy is in force at the time of the demand, and the claim is reported during the active policy period with premiums paid. Specific trigger language is set by the policy wording. Informal collection calls or a single missed payment by the business do not trigger a claim.
As with any insurance policy, disputed claims can be appealed through the insurer's review process, the applicable insurance regulator, or ultimately the courts. Clear documentation of the enforcement event and timely notice are the best protection against denial. Policy exclusions (fraud, material misrepresentation, post-distress binding) are the main reasons claims are contested.
Canada vs US
PGI is currently available in Canada. We are expanding to the United States. US business owners signing SBA 7(a), SBA 504, or commercial loan personal guarantees can sign up for the newsletter to be notified when US coverage launches.
The core product concept is the same in both countries. What differs is the regulatory overlay and the loan types that commonly require guarantees. Canadian policies are currently written under provincial insurance regulation. When US coverage launches, policies will be written in compliance with applicable state insurance regulation. Treatment will vary by jurisdiction.
Yes. The Canada Small Business Financing Program (CSBFP) requires a personal guarantee capped at 25% of the original loan amount. PGI can cover a portion of that capped guarantee. CSBFP's structure makes the exposure somewhat more bounded than an unlimited SBA 7(a) guarantee, but it still represents real personal risk. See the CSBFP guide.
For Canadian operators with US loans or US operators with Canadian loans, coverage is evaluated case by case. The guarantee is typically governed by the law of the jurisdiction where the loan is made. PGI writes policies tied to that jurisdiction and will review cross-border deal structures during underwriting. Complex structures may involve multiple policies.
Disclaimer: This FAQ is a general summary and does not change or replace the policy wording. Coverage is subject to underwriting, jurisdictional availability, and the terms, conditions, exclusions, and limits of the issued policy. This is not legal or tax advice. PGI is not affiliated with or endorsed by the U.S. Small Business Administration.
Related Articles
Personal Guarantee 101
- What is Personal Guarantee Insurance? - A complete explanation of how PGI works, what it covers, and who it is designed for.
- Can you insure a personal guarantee? - A plain-English answer to the question most business owners ask first.
- Unlimited vs Limited Personal Guarantees - The structural differences between these two guarantee types and what each means for your personal exposure.
- Personal Guarantee vs Collateral - How a personal guarantee and collateral function differently as lender security, and where PGI fits.
Claims and Distress
- Personal guarantee release - The circumstances in which a lender may release a personal guarantee, and the process involved.
- What happens when a personal guarantee is called - A step-by-step account of the enforcement process from lender demand to resolution.
Still have questions?
Contact us and we'll answer any questions about your specific situation.