Personal Guarantee Insurance
A Personal Guarantee is a measure of lender security often required in support of Commercial Finance. In the event of company insolvency where there is an outstanding debt, Lenders will action the Personal Guarantee, forcing the director to sell their personal assets to repay the amount owed.
Jefferson Connect are specialists in Personal Guarantee Insurance, a protection product that will protect your family home, savings and pension in the event of company insolvency. Because of our unique relationship with insurers, we can often provide a solution that is unachievable through other brokers.
How Personal Guarantee Insurance Works
The level of cover is based on a fixed percentage of the Personal Guarantee and depends on whether the Personal Guarantee is signed in support of a secured or unsecured loan.
For Personal Guarantees signed in support of Secured Loans:
Year one and thereafter: 80%
For Personal Guarantees signed in support of Unsecured Loans:
Year one: 60%
Year two: 70%
Year three and thereafter: 80%
The annual premium is calculated based on your individual circumstances and the individual requirements of the applicant. Successful applicants will have a choice to pay the premium upfront in full or via a monthly direct debit instalment facility.
Key Features of Personal Guarantee Insurance
1. Coverage
Personal Guarantee Insurance covers a fixed percentage of your exposure, this is often limited to 80% as the insurer will need the insured directors to hold a registered interest in the repayment of the loan and financial well being of the company.
2. Flexibility
All policies are a tailored solution for your business requirements, a single policy can cover multiple loans and directors; the insurers will also allow for incremental increases in coverage if more finance is acquired.
3. Affordable Premiums
The cost of the insurance typically depends on the finance in place and the wellbeing of the company. However, it’s in the insurers best interest to offer a premium that is affordable to avoid additional pressure to the finances of the business.
4. Tax Deductible Company Expense
Although the Insurance is for your personal benefit, the cost can be paid for by the business. Although most clients choose to pay for the insurance through the business we would encourage Directors to take their own advice with their accountants on this position.
5. Support and Negotiation
Insurance providers have an interest in the progress of your business when you buy a policy; For this reason, they offer support services to mitigate the likelihood of company insolvency. Providers will also appoint and contribute towards a professional debt negotiator if the Personal Guarantee is actioned, which works to reduce the demand and relieve stress to directors.