PERSONAL GUARANTEE INSURANCE (PGI)
PGI provides insurance for individuals (usually Directors) who have given a Personal Guarantee to a lender in respect of the borrowings of his limited company in the event that when called in the company is unable to repay the whole of the borrowings and the guarantee is called upon.
This PGI product has been brought to market by Steve Thatcher a qualified solicitor specialising in insolvency and David Chappell an accountant and insolvency expert.
The product came about as a result of the experience Steve and David found on a daily basis when dealing with insolvent businesses. They thought that if they could find a mechanism which would oblige a company to call them in sufficient time prior to getting a call to come and help close the company, then perhaps the company could be turned around and saved.
Steve and David had also noted the trend now for taking personal guarantees from directors for all lending given to a company by a financial institution. It is obvious why a lender would want to take this measure, but it inevitably leaves a director (and perhaps the debtor’s family) personally exposed if his or her limited company fails.
WHY IS PERSONAL GUARANTEE INSURANCE UNIQUE?
The PGI is the first of its kind to provide protection and advice at the same time. The policy can be purchased at anytime either for an existing guarantee or as finance is taken out.
HOW IT WORKS
The guarantor is protected in the event of the company failing to pay back it’s lender in full. Cover starts at 50% for each guarantor of the amount of the guarantee in year 1, up to 90% in year 5 and subsequent years.