Robsons Group
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Email: Info@robsons.co.za
Tel : +27 (31) 701 4877
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Business Liability Protection
THE PROBLEM
An owner of a company often has to provide personal security for a loan taken out by the business. But what happens to the debt should this person die or become disabled?
For the owner
The owner will be personally liable for the debt if the business is unable to repay the loan.
Should the owner die before the debt has been settled, the creditor has the right to claim the outstanding money from his/her estate. Debts are settled at the expense of heirs and dependants and the estate may be declared insolvent if debts exceed assets.
Should the owner become disabled, the creditor has the right to claim the amount from him/her personally.
For the business
If it was required that the debt be settled from the deceased’s personal estate, the estate may claim the outstanding amount from the business or remaining owners. The business may be forced to sell its assets should the remaining owners fail to raise funds elsewhere.
THE SOLUTION
Business liability protection is risk insurance that a business takes out on the life of an individual who stands surety for the debts of the business. The amount of cover should be equal to the loan amount.
What are the benefits for the owner?
His or her personal assets are released from any liability on death or disability.
The estate is finalised with less hassle. The lifestyle of the dependants is unaffected.
What are the benefits for the business?
Business liability protection protects the business from any adverse effect on its creditworthiness as a result of death or disability of the person who stands surety.
The outstanding liability is settled in full.
The financial resources of the business are not put under any undue strain.