How Personal Guarantee Insurance Works

Personal Guarantee Insurance is a specialty insurance product that may reimburse a covered portion of a personal guarantee obligation when a business defaults on a loan and the lender enforces the guarantee. The application begins with the CORE Score, a brief online assessment that produces an indicative premium. Once bound, the policy is claims-made: coverage applies only to claims made and reported during an active policy period with premiums paid in full. PGI is currently available to Canadian borrowers, with US expansion planned.

It's insurance, so we had to make it better.

We simplified underwriting, cut the paperwork, and made it possible to protect your personal assets in minutes, not weeks.

1

Submit Your Information

Provide details about the loan, the personal guarantee amount, your business financials, your NAICS code, and your personal credit profile. The application takes about 10 minutes. No paperwork to mail, no forms to fax. Learn how we underwrite.

2

Receive Your Quote

Our underwriting engine evaluates your application and returns an indicative premium quote. You'll see the premium and key coverage terms, subject to underwriting and final policy issuance.

3

Review and Bind Coverage

Review your policy terms, coverage limits, and premium. When ready, you can bind coverage digitally where available. Policy issuance timing varies. Coverage applies only as stated in the policy and only during an active policy period with premiums paid in full.

4

Manage Your Policy

Access your policy documents, track coverage status, and manage renewals through your dashboard. If you ever need to file a claim, the process is clear and straightforward. Support is available when you need it.

Why Do I Need This Coverage?

When you sign a personal guarantee, you're putting personal wealth on the line - potentially including your home equity, savings, and other personal assets. If your business can't repay the loan, the lender may pursue your personal assets to satisfy the debt.

Most business owners don't fully appreciate this risk until it's too late. They sign guarantees because it's "just part of the deal" without considering what happens if things don't go as planned.

Consider this: You wouldn't operate a business without liability insurance. You wouldn't drive without auto insurance. Why would you sign a personal guarantee without protection?

PGI converts an open-ended personal liability into a defined, manageable cost. Instead of hoping nothing goes wrong, you have a policy that responds when things do. That's not pessimism - that's the same disciplined risk management that makes you a good operator.

What Does PGI Cover?

If a personal guarantee is enforced and you incur a covered personal payment obligation, PGI may reimburse a covered portion - subject to underwriting and the policy's terms, conditions, and limits. Coverage is claims-made and applies only to claims made and reported during an active policy period with premiums paid in full, as stated in the policy.

PGI may cover personal guarantees supporting many forms of business financing - subject to underwriting and jurisdiction - including:

Term loans and lines of credit - Traditional bank financing
Equipment financing - Machinery, vehicles, technology
Commercial real estate loans - Property acquisition
Acquisition financing - M&A and business purchases

Policyholders typically retain some exposure. The policy may reimburse a defined portion, subject to policy terms, conditions, and limits.

How Is a PGI Policy Structured?

PGI is a one-year claims-made policy. That structure matters in practice. Coverage applies only to claims made and reported during an active policy period with premiums paid in full. A policy that has lapsed, been cancelled, or expired cannot accept new claims, regardless of when the underlying business problem arose.

Because most business loans run for multiple years, policyholders renew annually for the life of the loan. Each renewal keeps coverage aligned to the outstanding guarantee exposure. If a loan runs for five years and a policyholder allows the policy to lapse in year three, coverage for guarantee enforcement events arising after the lapse date would not apply.

The coverage amount is tied to the guarantee, not the original loan balance. As the loan amortizes and the outstanding principal falls, a policyholder may choose to adjust coverage at renewal to reflect the reduced exposure. This is a planning matter, not an automatic adjustment.

The 20% deductible means the policyholder retains a portion of the exposure. On a $1,000,000 coverage limit, the policyholder's retained share is $200,000. The policy may reimburse up to $800,000, subject to the terms. This is a deliberate structural feature: it aligns the policyholder's incentives with disciplined business management.

When Is a PGI Claim Triggered?

Business default alone does not trigger a PGI claim. The trigger is the formal enforcement of the personal guarantee by the lender, resulting in a personal payment obligation arising to the policyholder.

The sequence typically works like this. The business falls into default. The lender pursues its remedies against the business: it applies any collateral, liquidates business assets, and applies the proceeds against the outstanding loan balance. If the proceeds fall short of the balance owed, the lender may then issue a formal demand under the personal guarantee. That demand, and the personal payment obligation it creates, is the event that a covered claim addresses.

Timing matters. PGI is claims-made. The claim must be made and reported during an active policy period. If the guarantee is enforced after a policyholder has allowed the policy to lapse, coverage would not apply. This is why continuous coverage, renewed annually for the life of the loan, is the approach that keeps protection aligned to the exposure.

Prompt reporting matters as well. Policy conditions govern the reporting requirements. Delays in reporting may affect eligibility. Policyholders should review their policy terms and act promptly if a guarantee enforcement event occurs or appears imminent.

What Happens During a PGI Claim?

When a policyholder believes a claim event has occurred or is occurring, the first step is to notify the insurer promptly and in accordance with the policy's reporting requirements. The policy governs the documentation needed and the process that follows.

Generally, the policyholder will need to provide documentation showing that the guarantee has been formally enforced, that a personal payment obligation has arisen, and that the claim is being submitted within the active policy period. The insurer evaluates the submission against the policy's terms, conditions, and exclusions.

If the claim is covered, the policy may reimburse a defined portion of the personal payment obligation, subject to the applicable deductible and the policy limit. The insurer does not pay the lender directly. The policy addresses the policyholder's personal obligation. Subrogation rights may apply, meaning the insurer may have the right to seek recovery from the parties responsible for the loss after paying a covered claim. This is a standard feature of most commercial insurance products and is governed by the policy terms.

The claims process is designed to be straightforward. Policyholders have access to support throughout. The specifics are governed by the policy document, which policyholders should review carefully and retain for the life of the loan.

What Does PGI Not Do?

Clarity on limitations is as important as understanding what coverage does. Several points are worth stating plainly.

PGI is not loan payoff insurance. The policy does not pay off the loan balance. It addresses the personal payment obligation arising from guarantee enforcement, subject to policy terms and limits.
PGI is not bankruptcy protection. A PGI policy does not prevent, delay, or substitute for personal insolvency proceedings. It does not remove the personal guarantee obligation from a bankruptcy estate.
PGI does not release the guarantee. The personal guarantee remains fully enforceable. PGI does not alter or modify the lender's rights under the guarantee in any way.
PGI is not a substitute for lender underwriting. The insurer conducts its own underwriting independently. A policy being issued does not mean the lender's underwriting requirements are satisfied, nor does it affect the lender's risk assessment of the loan.
PGI does not prevent business failure or default. It is designed to address personal financial exposure after a worst-case outcome, not to prevent that outcome.

Who Is Eligible and How Do You Apply?

PGI is designed for business owners who have signed, or are about to sign, a personal guarantee in support of a business loan or obligation. General eligibility criteria consider the financial profile of the borrower, the nature and performance of the business, the loan structure, and jurisdiction. Underwriting determines eligibility and final terms for each applicant. Specific underwriting criteria are not disclosed publicly.

Applications are completed through the PGI app. The process takes approximately 10 minutes and requires basic information about the loan, the guarantee amount, the business's financial profile, and the applicant's credit information. No paperwork needs to be mailed or faxed.

The best time to apply is before or when the personal guarantee is signed. In some cases, existing guarantees may be eligible for coverage, subject to underwriting review of loan status, performance, and timing.

PGI is currently available to Canadian borrowers. US borrowers can sign up for launch updates at pgicover.com/contact. Treatment may vary by jurisdiction. Always consult a licensed insurance professional for advice relevant to your specific situation.

Common Questions

Many applications take about 10 minutes to complete. You'll need basic information about the loan, your business financials, and your personal credit profile.

PGI is designed for deal speed. Once approved, coverage may be eligible for digital binding where available. Policy issuance timing varies based on underwriting requirements.

In some cases, existing guarantees may be eligible, subject to underwriting review of loan status, performance, and timing.

Claims are governed by the policy. Generally, a covered claim may arise when the guarantee is enforced and you incur a covered personal payment obligation. Coverage applies only to claims made and reported during an active policy period with premiums paid in full, subject to the policy.