General Partner Liability (GPL) Insurance
Complete Guide for Private Equity and Venture Capital Funds
GPL Insurance Overview
General Partnership Liability (GPL) insurance is a specialized form of D&O and E&O coverage designed for private equity and venture capital fund managers.
It protects the general partner (GP) and its leadership against lawsuits from limited partners (LPs), regulators, or co-investors - especially when claims involve fund mismanagement, fiduciary breach, or oversight failures.
Without GPL, fund managers can be personally liable for millions in legal costs tied to capital decisions, LP disputes, or regulatory investigations. It's not a nice-to-have. It's the last line of defense between a claim and your personal assets.
What is GPL Insurance
General Partnership Liability (GPL) Insurance protects private equity and venture capital fund managers from personal and fund-level liability. It covers claims brought by limited partners, co-investors, and regulators, and fills the gap where corporate D&O doesn’t reach.
It typically insures:
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The General Partner (GP) entity
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Fund managers, investment committee members, advisors
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Officers named in LPAs, side letters, or board minutes
Why Does GPL Insurance Matter
When fund decisions lead to litigation—whether from LPs, portfolio blowups, or compliance missteps—there’s no corporate shield to hide behind. GPL is the only policy that protects GPs directly.
Common claim scenarios include:
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LPs alleging breach of fiduciary duty
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SEC investigations or subpoenas
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Portfolio company oversight claims
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Conflicts of interest (e.g., fund-to-fund trades)
Without GPL, defense costs and settlements fall on the fund—or its partners personally.
What’s Inside a GPL Policy: Key Coverage Components
Every GPL policy should be built around a core set of insuring agreements. These elements define what gets covered—and what gets denied - when the fund or its managers are named in a claim.
Here’s how each piece works, and what to watch for:
1. Side A - Non-Indemnifiable Coverage
Protects individual fund managers when the firm or fund can’t indemnify them - due to insolvency, legal restrictions, or conflict of interest.
- This is the last line of defense when everything else fails - and it pays first, with no retention.
Example triggers:
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Fund is bankrupt and can’t indemnify a GP
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Manager is sued personally and indemnification is contested
2. Side B – Indemnifiable Coverage
Covers the fund or firm when it reimburses its managers for defense costs or settlements.
- This is where most claims hit first, but it comes with a retention (deductible), often six figures.
What to check:
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Are all GPs, advisors, and IC members explicitly covered?
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Is Side B shared with other limits?
3. Side C – Entity Coverage
Covers the fund itself or its management company when it’s directly named in a lawsuit.
- Critical for fund-wide litigation, reputational harm, and disputes tied to capital allocation or investor treatment.
Pro tip: Many Side C claims come from LP lawsuits or reputational blowback, not just pure financial loss.
4. E&O – Private Investment Activity & Errors and Omissions
This is the true heart of a GPL policy. It covers the fund’s core activities:
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Raising and managing LP capital
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Investing (or choosing not to invest)
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Providing oversight to portcos
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Engaging with outside service providers
- E&O claims are often the most expensive and most misunderstood part of a GPL policy.
Underwriting tip: Many GPL policies use vague or outdated E&O language.
5. ODL – Outside Directorship Liability Coverage
Protects fund managers serving on portfolio company boards.
ODL typically sits above the portco’s D&O and indemnity - and kicks in when that coverage is gone.
- This is where many venture claims land - especially when the portco is insolvent, underinsured, or in bankruptcy.
Double Excess Warning: ODL applies only after both D&O and indemnification are exhausted.
Make sure you’re not betting on coverage that disappears when the company fails.
6. Additional Coverage Enhancements (Optional but Critical)
Employment Practices Liability (EPL)
Covers HR-related claims against the management company - sexual harassment, discrimination, retaliation, and wrongful termination.
- Often sub-limited and shared with GPL - review carefully.
ERISA Fiduciary Liability
Applies when the firm sponsors a 401(k) or benefits plan.
- ERISA fiduciaries can be personally liable for plan mismanagement.
Fidelity Bond / Crime Coverage
Protects against internal theft, wire fraud, forgery, and social engineering.
- Now essential for funds with distribution obligations, liquidity events, or LP transfers.
Cyber Liability
Covers data breaches, ransomware, and network-based losses tied to investor data or operational continuity.
- Cyber attacks targeting fund managers have increased, especially post-transaction.
GPL vs. PortCo D&O
Risk Exposure
Fund Level GPL
Portfolio Company D&O
LP lawsuit against the General Partner (GP)
Yes
No
SEC subpoena targeting the fund or fund manager
Yes
Limited
Claims against GP for oversight of a failed portco
Yes
No
Claim against a portfolio company executive
No
Yes
Shareholder or vendor dispute at the portco level
No
Yes
Fund manager named in a portco lawsuit (as board rep)
Maybe
Yes
GPL protects the fund and its managers. PortCo D&O covers executives at the company level. This comparison breaks down what each policy covers - and why relying on PortCo D&O leaves fund managers exposed to personal and fund risk.
GPL & Claims
General Partnership Liability (GPL) insurance isn’t for theoretical risk - it’s for the moment when your fund, your reputation, or your own name appears on the first page of a legal demand. These scenarios aren’t hypotheticals. They’re based on real claims brought against fund managers for LP disputes, regulatory inquiries, portfolio oversight failures, and board-level liability.
If your GPL coverage isn’t structured to respond, these are the moments when your protection breaks down - and your personal assets are on the line.
1. The Portfolio Company Gets Sued
A portfolio company faces a lawsuit - maybe a shareholder claim after a down round, an employment dispute involving executive misconduct, or a regulatory enforcement action.
The claim names the company, the CEO, and board members.
2. The VC Firm Is Pulled Into the Lawsuit
Because a partner at the fund holds a board seat (or even attended board meetings informally) the VC firm and its general partners are named as defendants.
Even if the firm isn’t alleged to have directly caused harm, plaintiffs often name the fund to create leverage or extract larger settlements.
3. The Portfolio Company’s D&O Policy Responds — But It Has Limits
Portco’s D&O policy provides initial defense and indemnity, but:
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May run out of limits if multiple defendants are named
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May exclude the VC firm if not scheduled
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Likely prioritizes company insiders (Side B/C) over the VC board designee
The GPL policy must be structured as excess over the portfolio company’s D&O - not duplicating it, but stepping in when it fails or is exhausted.
4. GPL Becomes the Backstop for the Fund and the Partners
A properly structured GPL policy:
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Covers the fund itself, the management company, and individual GPs
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Responds to defense and settlement costs when named in portfolio-related suits
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Can include Side A-style protection for individuals if indemnity is unavailable
5. This Only Works If the Portco Has D&O
Without D&O at the portfolio company level, the GP and fund may be exposed from day one - especially if they’re on the board or providing strategic direction.
At URM, we ensure portfolio companies have adequate D&O in place, and that the GPL policy is structured to sit excess with clean language for claim coordination.
Key Takeaway
GPL is not a replacement for portfolio company D&O - it’s the overflow valve.
When your firm is named, and the portco’s policy is either exhausted or insufficient, GPL protects your balance sheet and your partners.
Limits & Pricing
PE Fund Size
Limits
Premiums
< $100M
$1M - $2M
$25k - $35K
$100M - $500M
$3M - $5M
$40K - $80K
$500M - $1B
$5M - $10M
$75 - $150K
$1B $5B
$10M+
$150K+
Common Coverage Gaps
Even when a GPL policy is in place, it often fails where it matters. We audit every policy for:
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Regulatory Investigation - only includes formal investigations
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GP entity not properly listed or named
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No coverage for non-indemnified individuals (think advisors, independent members)
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SEC coverage excluded or sublimited to near-zero
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Side letter liabilities not addressed
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Shared limit structures with portco D&O that create silent erosion
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Activist shareholder exclusions
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Insured v. Insured Exclusion including LPs
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Professional Services Exclusions removing advisory services or consulting
