top of page
PE | GPL Insurance Guide

What This GPL Insurance Guide Covers

  • What General Partnership Liability (GPL) insurance actually covers (and what it doesn’t)

  • The difference between Side A, B, and C coverage

  • Real examples of SEC investigations and investor-driven claims

  • The most common GPL insurance gaps fund managers miss

  • Key underwriting and pricing factors for 2025

  • How to structure your policy for your fund’s strategy, structure, and risk exposure

​

Allocating Insurance Premiums Between Fund and Management Company:  An Overview for PE and VC Firms

Allocating Insurance Premiums in Private Equity & VC Funds | GPL & D&O Guide

Introduction: A Common Question With High-Stakes Consequences

Introduction:

A Common Question With High-Stakes Consequences 

 

One of the most common - and misunderstood - questions we hear from CFOs, COOs, and GCs at private equity and venture capital firms is:

"How should we allocate our insurance premiums between the fund and the management company?"

Get it wrong, and you risk:

  • Violating your LPA

  • Misallocating costs that should be borne by the management company

  • Triggering LP concerns or audit flags

  • Leaving key individuals or entities uninsured

In this guide, we break down the logic, best practices, and real-world application of premium allocation across D&O, GPL, and related coverages.

Why Allocation Matters in PE & VC Insurance Programs

1. Why Allocation Matters in PE & VC Insurance Programs


The fund and the management company are separate legal entities with distinct functions and risks:
 

  • Fund:

    • Role: Holds investments, interfaces with LPs

    • Primary Risks: LP litigation, investment claims, GP liability

  • Management Company:

    • Role: Operates the business, employs staff

    • Primary Risks: Employment risk, cyber exposure, operational liability


Failing to account for this separation when purchasing and allocating insurance - particularly D&O and General Partnership Liability (GPL) coverage - can result in:

  • Coverage disputes

  • IRS or auditor scrutiny

  • Backlash from limited partners

Explore

What Coverages Are Typically Shared or Split

2. What Coverages Are Typically Shared or Split
 

Not all policies require allocation, but these three usually do:


D&O Insurance

  • Covers both fund and management company executives.

  • Often includes a shared limit, but the benefit differs.


GPL Insurance (General Partnership Liability)

  • Protects the GP entity (often owned by management co) and individuals when indemnification fails.

  • High-risk, high-stakes coverage that must be allocated carefully.


Cyber or EPL (Employment Practices Liability)

  • Usually applies only to the management company, unless the fund directly handles sensitive LP or deal data.

Three Common Allocation Methods (and Which Works Best)

Option 1: Straight Percentage (e.g., 50/50 or 70/30)

  • Pros: Simple, easy to calculate.

  • Cons: Doesn’t reflect real exposure or policy beneficiaries.


Option 2: Risk-Based Allocation (Recommended)

  • Evaluate:

    • Named insureds

    • Relative exposure by entity

    • Who benefits most from the coverage

  • Example: GPL may be 80% fund, 20% management co; D&O may be 60/40 the other way.


Option 3: Entity-Specific Pay

  • Fund pays for fund/GP risk (GPL, D&O portion)

  • Management company pays for ops-driven policies (EPL, cyber)

  • Clear, defensible, and aligned with many LP expectations

LP, IRS & Audit Considerations

4. LP, IRS & Audit Considerations

​

LPAs often contain language about what the fund can and can’t pay for.

  • GPL and fund-level D&O are usually allowed

  • EPL and cyber are not, unless the fund is the operating entity

  • Documenting allocation protects you during audits or LPAC reviews

 

Pro Tip: If you're not sure what your LPA says, review it before allocating premiums.

Best Practice: Use a Formal Premium Allocation Memo

5. Best Practice: Use a Formal Premium Allocation Memo
 
Every year, or at renewal:

  • Draft a simple one-page memo

  • Explain why and how premiums are split

  • Attach to your binder or store alongside your program docs
     

This protects:

  • Fund CFOs from internal disputes

  • LP-facing teams from uncomfortable questions

  • GPs from surprise liability or non-reimbursement

URM’s Take: How We Help PE & VC Clients Get This Right

6. URM’s Take: How We Help PE & VC Clients Get This Right

At Upward Risk Management, we:

  • Structure insurance programs across fund, GP, and management company lines

  • Create customized allocation frameworks that align with LP agreements

  • Benchmark your allocations against peer firms

  • Review GPL, D&O, and fiduciary exposures together to build the full picture

We don’t just place policies - we engineer protection across your entire structure.

Book a strategic review of your insurance program today.

If you're managing fund risk, board exposure, or portfolio oversight, schedule a no-pressure review with URM. We’ll benchmark your structure, flag any coverage gaps, and tailor a program to your goals.

bottom of page