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What This GPL Insurance Guide Covers
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What General Partnership Liability (GPL) insurance actually covers (and what it doesn’t)
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The difference between Side A, B, and C coverage
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Real examples of SEC investigations and investor-driven claims
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The most common GPL insurance gaps fund managers miss
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Key underwriting and pricing factors for 2025
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How to structure your policy for your fund’s strategy, structure, and risk exposure
Private Equity Insurance
Introduction:
Why Private Equity Insurance Is Different (and Dangerous When Done Wrong)
Private equity firms operate with complex legal and financial structures that traditional insurance often fails to fully protect. While many assume a portfolio company's insurance covers the fund or its general partners, this is a costly misconception.
The reality: PE firms face exposure at three levels - fund, GP, and portfolio. If you're a CFO, COO, or GC responsible for risk, this guide will show you how to structure insurance intelligently, avoid gaps, and partner with brokers who understand the game.
What is Private Equity (PE) Insurance
1. What Is Private Equity Insurance?
Private equity insurance refers to the suite of coverage designed to protect:
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The Fund (as an entity)
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General Partners and executives
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Portfolio Companies owned or controlled by the fund
Unlike standard D&O insurance, private equity insurance must address shared governance, control liability, indemnification gaps, exit risks, and regulatory scrutiny.
Key Insight: If your firm holds board seats, has management rights, or exercises control, you have direct exposure that no portfolio-level policy can absorb.
Key Insurance Policies for Private Equity Funds
2. Key Policies Every PE Fund Should Consider
D&O Insurance for PE Funds
Protects fund managers, committees, and GPs from lawsuits tied to fund operations, investment decisions, and investor relations.
GPL Insurance
Fills the gap where the GP entity is personally named—especially if indemnification fails or is limited.
Cyber Insurance
Often overlooked at the fund level, but critical if the firm operates shared tech platforms or handles LP or financial data.
R&W (Reps & Warranties)
Used in M&A deals to backstop claims related to representations during purchase agreements. Often paid by the fund or seller.
Common Private Equity Insurance Mistakes
3. Common Private Equity Insurance Mistakes (and How to Avoid Them)
Mistake #1: Assuming Portfolio D&O Covers the GP
Wrong. That policy protects the portfolio company and its execs—not fund managers or the GP.
Mistake #2: Failing to Formalize Indemnification
If the GP indemnification isn’t formalized or enforceable, coverage gaps widen. GPL can fill it—if purchased.
Mistake #3: Relying on Retail Brokers
Many brokers apply corporate insurance templates to fund structures. PE needs specialized underwriting knowledge.
Mistake #4: Ignoring Fund-Level Cyber Risk
Funds now face phishing attacks, LP data breaches, and SEC scrutiny. Cyber liability isn't just a portfolio concern anymore.
Case Study: How a Mid-Market PE Fund Avoided a $3M Lawsuit
5. Case Study: How a Mid-Market PE Fund Avoided a $3M Lawsuit
A mid-sized PE firm controlled a fintech portfolio company whose D&O policy had a broad insolvency exclusion. When the company was sued post-layoffs, the fund and GP were both named.
The fund had purchased GPL insurance. It kicked in and covered legal fees and settlement costs, preserving the GP's indemnification rights and avoiding a cash hit.
Lesson: Don’t rely on downstream insurance to protect upstream risk.
How to Work With a Specialist PE Insurance Broker
6. How to Work With a Specialist PE Insurance Broker
Your broker should:
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Understand fund structure and management company splits
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Advise on indemnification language
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Benchmark policies across other funds your size
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Explain coverage exclusions that impact control or board roles
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Coordinate portfolio company placements to align with fund strategy
At URM, we combine legal and underwriting expertise to structure programs for modern PE firms. We speak fund mechanics, not just policy language.
Allocating Premium Between Fund and Management
FAQs: Private Equity Insurance in 2025
7. FAQs: Private Equity Insurance in 2025
What does private equity insurance cover?
It covers risks at the fund, GP, and portfolio level: D&O, GPL, cyber, R&W, fiduciary, and more.
What is GPL insurance and why does it matter?
- GPL stands for General Partnership Liability insurance. It protects GPs personally when portfolio D&O or indemnification fails.
Does a portfolio company D&O policy protect the fund?
- No. Unless the fund or GP is a named insured (rare), it offers no coverage upstream.
Do PE funds need cyber insurance?
- Yes, especially if they use data platforms, hold LP information, or operate shared systems.
Should funds pay for portfolio company insurance?
- In control situations, yes. It’s often more efficient, and it helps ensure proper terms and limits are in place.
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