GPL & Complex Claims
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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.
GPL Insurance protects the general partners of a fund, and the fund itself, from liability tied to the management of that fund. It covers legal defense, settlements, and regulatory costs related to claims of breach of fiduciary duty, misrepresentation, conflicts of interest, or errors in portfolio company oversight.

As a general partner, you carry personal liability for fund-related decisions, even when acting on behalf of the partnership. GPL insurance protects you from lawsuits filed by:
- LPs alleging mismanagement, misallocation, or self-dealing
- Co-investors disputing terms, valuation, or portfolio conflicts
- Portfolio company shareholders asserting wrongful influence or board-related liability
- Regulators scrutinizing disclosure, fundraising, or governance practices
What is General Partner Liability?
General Partner Liability (GPL)
When you manage capital, you take on personal risk.