How Personal Guarantee Insurance works
PGI transfers part of the personal downside on a named loan guarantee, subject to underwriting, policy terms and timely claims reporting. It begins with the CORE Score and, once bound, runs as a claims-made policy renewed for the life of your loan.
Quick answer
Personal Guarantee Insurance may reimburse a covered portion of a personal guarantee obligation when a business defaults and the lender enforces the guarantee. The application begins with the CORE Score. Once bound, the policy is claims-made: coverage applies only to claims made and reported during an active policy period with premiums paid. Available in Canada, with US expansion planned.
Four steps, minutes not weeks
We simplified underwriting, cut the paperwork, and made it possible to protect your personal assets in minutes, not weeks.
- 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 ten minutes. Nothing to mail or fax. See how we underwrite.
- Receive your quote. Our underwriting engine evaluates the application and returns an indicative premium. You see the premium and key coverage terms, subject to underwriting and final policy issuance.
- Review and bind coverage. Review your terms, limits and premium. When you are ready, you can bind coverage digitally where available. Coverage applies as stated in the policy, during an active policy period with premiums paid.
- Manage your policy. Access your documents, track coverage status and manage renewals from your dashboard. If you ever need to file a claim, the process is clear, and support is available.
Why do I need this coverage?
When you sign a personal guarantee you put personal wealth on the line, potentially including your home equity, savings and other personal assets. If the business cannot repay the loan, the lender may pursue those assets to satisfy the debt.
Most owners do not fully appreciate this risk until it is too late. They sign guarantees because it is part of the deal, without considering what happens if things do not go as planned.
You would not operate a business without liability insurance, or drive without auto insurance. A personal guarantee deserves the same discipline. 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.
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 terms, conditions and limits. Coverage is claims-made and applies only to claims made and reported during an active policy period with premiums paid.
Subject to underwriting and jurisdiction, PGI may cover guarantees supporting many forms of business financing:
- Term loans and lines of credit, traditional bank financing
- Equipment financing, machinery, vehicles and technology
- Commercial real estate loans, property acquisition
- Acquisition financing, M&A and business purchases
Policyholders typically retain some exposure. The policy reimburses a defined portion, subject to its terms, conditions and limits.
How is a PGI policy structured?
PGI is a one-year claims-made policy, and that structure matters in practice. Coverage applies only to claims made and reported during an active policy period with premiums paid. A policy that has lapsed, been cancelled, or expired cannot accept new claims, regardless of when the underlying problem arose.
Because most business loans run for several years, policyholders renew annually for the life of the loan. Each renewal keeps coverage aligned to the outstanding guarantee exposure. If a loan runs five years and the policy lapses in year three, coverage for enforcement events after the lapse would not apply.
The coverage amount is tied to the guarantee, not the original loan balance. As the loan amortizes, you may choose to adjust coverage at renewal to reflect the reduced exposure. This is a planning matter, not an automatic adjustment.
The 20% retention means you keep a portion of the exposure. On a $1,000,000 limit, your retained share is $200,000 and the policy may reimburse up to $800,000, subject to terms. This is deliberate: it keeps your incentives aligned with disciplined business management.
When is a claim triggered?
Business default alone does not trigger a claim. The trigger is the formal enforcement of the guarantee by the lender, resulting in a personal payment obligation to you.
The sequence usually runs like this. The business falls into default. The lender pursues its remedies against the business, applying collateral and liquidating assets against the balance. If the proceeds fall short, the lender issues a formal demand under the guarantee. That demand, and the personal obligation it creates, is the event a covered claim addresses.
Timing matters, because PGI is claims-made. The claim must be made and reported during an active policy period. If the guarantee is enforced after the policy has lapsed, coverage would not apply, which is why continuous coverage renewed for the life of the loan keeps protection aligned to the exposure. Prompt reporting matters too; policy conditions govern the requirements, and delays may affect eligibility.
What happens during a claim?
When you believe a claim event has occurred or is occurring, the first step is to notify the insurer promptly and in line with the policy reporting requirements. The policy governs the documentation and the process that follows.
Generally you provide documentation showing the guarantee has been formally enforced, that a personal obligation has arisen, and that the claim is within the active policy period. The insurer evaluates the submission against the terms, conditions and exclusions.
If the claim is covered, the policy may reimburse a defined portion of the personal obligation, subject to the retention and the limit. The insurer does not pay the lender directly; the policy addresses your personal obligation. Subrogation rights may apply, meaning the insurer may seek recovery from responsible parties after paying a covered claim, as governed by the policy.
What does PGI not do?
Clarity on limits matters as much as clarity on coverage.
- PGI is not loan payoff insurance. It does not pay off the loan balance. It addresses the personal obligation arising from enforcement, subject to terms and limits.
- PGI is not bankruptcy protection. It does not prevent, delay or substitute for personal insolvency proceedings, and does not remove the guarantee from a bankruptcy estate.
- PGI does not release the guarantee. The guarantee remains fully enforceable. PGI does not alter the lender rights in any way.
- PGI is not a substitute for lender underwriting. The insurer underwrites independently. A policy being issued does not satisfy the lender requirements or change its risk assessment.
- PGI does not prevent business failure. It addresses personal exposure after a worst-case outcome, not the outcome itself.
Who is eligible, and how do you apply?
PGI is for business owners who have signed, or are about to sign, a personal guarantee for a business loan. Eligibility considers the borrower financial profile, the business, the loan structure and jurisdiction. Underwriting determines eligibility and final terms for each applicant.
Applications are completed in the PGI app in about ten minutes, using basic information about the loan, the guarantee amount, the business financials and your credit. Nothing needs to be mailed or faxed.
The best time to apply is before or when the guarantee is signed. In some cases existing guarantees may be eligible, subject to underwriting review of status, performance and timing. PGI is currently available to Canadian borrowers; US borrowers can join the list at our contact page. Treatment may vary by jurisdiction. Always consult a licensed insurance professional for advice on your situation.
