Debt Protection Insurance
Do you have any business debt or business loans, including overdraft facilities? Have the creditors and/or lender(s) required that you give a personal guarantee for the loan?
Many business borrowings are personally guaranteed by or secured over personal property (e.g. a home) of a working shareholder or director, although the burrowed money is used in the business deriving assessable income.
What are the legal repayment responsibilities of business owners in respect of death and disability where a commercial loan to the business is in place?
Sole traders and every partner in a partnership (jointly with other partners) are liable for business debt incurred while they are a partner or sole trader.
If the business is a limited liability company they directors/shareholders are often guarantors for the loan and the loan documentation can require the guarantors to be jointly and severally liable for the debt. This means each guarantor is liable for the full amount of the debt.
Business Debt Protection Insurance can be put in place for the repayment of debt to mitigate the risk of personal assets being placed at risk or the business being put at financial risk.
The purpose or intention of this insurance cover is to provide the business with funds, so that it can repay those borrowings on the death or disablement of the working shareholder or director, and release of any business-related personal guarantee or charge over personal assets given by that person.
An Adelphi Insurance adviser can sit down with you and your business partners, in the comfort of your office or home, and develop your business's personalised Business Insurance Plan to determine the ideal of Debt Protection cover you need for your business’s unique circumstances and needs.
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