PGI Canada launches personal guarantee cover for loans

PGI Canada has launched PGicover, a personal guarantee insurance product for Canadian business loans backed by Purbeck Insurance Services and Markel International Insurance Company Limited (Canadian Branch).

The insurance is aimed at business owners who sign personal guarantees as part of commercial borrowing arrangements. Lenders commonly require such guarantees and can leave owners personally liable if a business cannot meet its obligations.

Vancouver-based PGI Canada is distributing PGicover in Canada. Policies are administered by Purbeck Insurance Services and underwritten by Markel International's Canadian branch.

The cover is designed to reimburse a covered portion of a payment obligation if a personal guarantee is enforced, subject to policy terms, exclusions and limits. Policies are available online on a claims-made basis.

The launch brings to Canada a type of insurance already established in the UK. Purbeck and Markel have offered personal guarantee insurance there since 2017, and that arrangement forms the basis of the Canadian offering.

Personal guarantees are widely used in small and medium-sized business lending, particularly when a company is borrowing without extensive assets or a long credit history. They can expose directors and owners to losses that extend beyond the business and reach personal assets.

PGI Canada said its platform includes AI-assisted document review as part of the application and eligibility process, intended to help applicants understand potential personal liability before signing loan documents or completing a transaction.

Insurance to cover part of that exposure remains relatively niche in Canada, where owners have historically had limited options to offset the risk tied to personal guarantees. The new product enters a market where lenders often require such guarantees as a standard condition of financing.

Craig Arnatt, Founder, PGI Canada, said the product addresses a gap in the market.

"We are proud to bring this solution to Canadian entrepreneurs, who are often required to take on significant personal financial risk to access capital. For many business owners, a personal guarantee represents their most significant individual financial exposure, with few options historically available to mitigate that risk," said Craig Arnatt, Founder, PGI Canada.

UK model

Purbeck pointed to its UK experience as evidence of demand for this type of cover among smaller companies and their directors. More than 5,000 company directors in that market have taken out insurance on guarantees totalling more than £700 million, it said.

That track record is likely to be watched closely in Canada, where business owners have faced higher borrowing costs and tighter lending standards in recent years. In that environment, securing finance can mean accepting broader personal exposure than some founders and directors are comfortable carrying.

Purbeck said the product is intended to give borrowers a way to define and manage part of that risk. It described the Canadian launch as part of a wider recognition of personal guarantee insurance as a practical tool for small and medium-sized business owners.

"The launch of PGicover is an important milestone for the Canadian market and for the growing recognition of personal guarantee insurance as a practical risk management tool for small and medium-sized business owners. In the UK, we have seen the impact this protection can have: more than 5,000 company directors have taken out cover on guarantees totaling over £700 million. For many, it has provided the confidence to pursue growth without taking on an unsustainable level of personal financial risk. We look forward to seeing PGicover bring that same clarity and protection to Canadian business owners," said Todd Davison, Managing Director, Purbeck Personal Guarantee Insurance.

Insurance backing

Markel International Insurance Company Limited (Canadian Branch) is underwriting the policies. According to the companies involved in the launch, the insurer's Canadian branch is rated A (Excellent) by AM Best.

For Markel, the product adds a specialised line aimed at a specific risk facing privately owned businesses and their principals. The insurer said the offering addresses an aspect of commercial borrowing that can be overlooked when owners focus on growth or access to credit.

"This offering reflects the evolving needs of Canadian business owners and the importance of addressing often overlooked personal financial exposures," said David Crozier, Chief Agent, Markel International Insurance Company Limited (Canadian Branch). "By combining specialised underwriting with an innovative approach to risk assessment, PGicover introduces a new way to help manage personal guarantee risk in the Canadian market."

PGI Canada focuses on personal guarantee insurance and said its platform is designed to help business owners cap personal financial loss arising from the enforcement of a guarantee. The technology supporting the application process is intended to streamline eligibility assessment and payment acceptance.

The arrival of PGicover gives Canadian borrowers a new insurance option in a financing market where personal guarantees remain a routine requirement and where the consequences of enforcement can extend well beyond the business's balance sheet.