Bespoke Risk Solutions launches new insurance product to mitigate risk to SMEs

Bespoke Risk Solutions (‘BRS’) today announced the launch of Personal Guarantee Insurance, together with Purbeck Insurance Services.

Research carried out recently by Instantprint revealed that more than ten per cent of small business owners are so concerned about ensuring the success of their firm that they get less than four hours sleep each night. (1).  In the survey, many business owners reported sleepless nights worrying about their company finances. Personal Guarantee Insurance from BRS could help Company Directors sleep easier at night by mitigating risk factors.

The specialist insurance policy protects the Director in the event that there is a call on their personal guarantee by a lender, following the failure of their company. The policy offers security and peace of mind.   Peter Collins (Managing Director, BRS) commented, “With the uncertainty of Brexit, more Company Directors are being asked to provide personal guarantees in order to apply for finance, however, with every personal guarantee comes risk. Company Directors (in particular start-ups) need to be aware of the implications of signing on the dotted line.  Some do not realise that the guarantee they have provided could have a major implication on their own finances and in some cases they could lose their homes.” 

Personal guarantees are agreements that legally bind a company director to take a certain level of financial responsibility for his or her company’s debts in the event that they cannot be paid back by the business itself. However, in the unfortunate event the business becomes insolvent, the lender will take whatever action they can to recover their investments and the Directors that have given guarantees are the obvious choice as they have a legal contract. The lender will look to recover any shortfalls from their initial investment.

This insurance offers protection for Company Directors from a loan being called from the failure of their company to which they have provided a personal guarantee.  The level of cover increases gradually over a period, up to 80% of the liability by year three.

It could be argued that where professional advisers, including Accountants, Solicitors or IFAs, fail to advise their clients of the existence of such cover, they could be exposing themselves to claims in the event of a Director’s loan guarantee being called in, and whether their advice did reflect the risk that the Directors faced.

The policy can also facilitate other investments by the Directors, as advisers can remove some of the risk from the Directors financial position if the Director has the policy.  

BRS has carved out a niche in the insurance sector providing tailor-made risk and insurance products as well as review services for SME businesses and their advisors. An A-rated leading insurer underwrites the BRS Personal Guarantee Insurance facility. Full details are available on the BRS website www.bespokerisksolutions.com.