Protecting the founder personally

Personal guarantee insurance for founders

When you sign a personal guarantee for a business loan, lease or facility, you hand the lender a claim on your own money — usually your home — if the company can’t pay. It quietly undoes the whole point of a limited company. Personal guarantee insurance pays a large share of that guarantee if the worst happens, so a business setback doesn’t become a personal one.

Part of: Founder insurance at Apex

In short

Personal guarantee insurance (PGI) covers a proportion of a personal guarantee you’ve given for your business — on a loan, lease, overdraft, invoice or asset finance — if the company defaults and the lender comes after you personally. It protects the founder’s own assets, not the company’s.

What personal guarantee insurance is

A personal guarantee is a promise you make, in your own name, to repay a company debt if the business can’t. Lenders, landlords and suppliers ask directors for them all the time. The catch: a guarantee sits outside your limited company — so if the company fails, the lender can pursue your savings, and often your home, directly.

Personal guarantee insurance pays out a proportion of the outstanding guarantee if it’s called in. It doesn’t stop the company failing — it stops that failure taking your personal assets with it.

Why this catches founders out

Most founders believe “limited” means their personal money is safe. A personal guarantee is the exception that removes that protection — and by the time it matters, the business is usually already in trouble. Points worth knowing:

Banks, landlords, invoice financiers and asset-finance providers routinely require a director’s guarantee.
Guarantees stack up quietly — a facility here, a lease there — until the total exposure is far larger than the founder realises.
Women founders are asked to sign personal guarantees disproportionately often, so the exposure isn’t evenly spread.
It sits alongside, not instead of, director liability (D&O) — different risk, different cover.

What it covers and how it works

Cover is set as a percentage of the guarantee, and the proportion typically increases the longer the policy is held — so putting it in place early matters. In practice it can:

Pay a set share of the guarantee if the lender calls it in after the company defaults.
Apply across common facilities: business loans, commercial mortgages, overdrafts, invoice finance, asset finance and some leases and trade accounts.
Come with support to help before it reaches a claim.

The exact proportion, limits and terms depend on the facility, the lender and how long you’ve held cover — we’ll set out what’s achievable for your situation.

Who should look at it

Any founder or director who has personally guaranteed — or is about to guarantee — a business debt: a bank loan or overdraft, a commercial lease, invoice or asset finance, a supplier credit account, or borrowing taken on to fund growth. If you’ve signed something in your own name to get the company funded, this is for you.

What we need to arrange it

The guarantees you’ve signed and their amounts, who the lenders are, the facilities they relate to, and a picture of the company’s finances. With that we can tell you what cover is available and at what proportion.

Related founder cover

Founder insuranceThe full founder picture D&O for startupsDirector liability Key person coverIf you are the business Startups & scaleupsCompany-side cover

Frequently asked

What is personal guarantee insurance?

It’s cover that pays a proportion of a personal guarantee you’ve given for your business if the company defaults and the lender pursues you personally. It protects your own money — often your home — rather than the company’s assets.

Does it protect my house?

That’s the point of it. A called-in guarantee can put your home and savings at risk; the policy pays out a set proportion of the guarantee so a business failure doesn’t land directly on your personal assets.

How much of the guarantee is covered?

Cover is a percentage of the guarantee, and it typically rises the longer you hold the policy — which is why putting it in place early matters. The exact proportion depends on the facility and lender; we’ll confirm what’s achievable.

I have a limited company — do I still need it?

Often, yes. A personal guarantee deliberately sits outside your limited company, so “limited liability” doesn’t protect you against it. If you’ve signed guarantees, the limited structure alone won’t shield your personal assets.

Can a founder get personal guarantee insurance?

Yes — it’s aimed squarely at founders and directors who’ve signed guarantees to fund or run their business. We arrange it through specialist capacity.

Are the premiums tax deductible?

Premiums are often treated as an allowable business expense, but that depends on your circumstances — check with your accountant.

Protect the guarantees you’ve signed

Tell us what you’ve personally guaranteed and we’ll arrange cover that keeps your own assets out of the firing line. Or call 0117 325 0027.

Get a quote Call 0117 325 0027

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.