Insurance For Holding Companies

[CaptainCaveman]

I was wondering if a holding company should have any insurance? In this scenario the company holds membership interests in other companies and does not actively participate in management. Can it carry an umbrella policy and add each subsidiary as an additional insured?

Should the LLC management company carry any insurance? It’s role is to manage the subsidiaries.

Each subsidiary owns rentals, there is no property manager and has a landlord policy. Are members and managers automatically covered under a landlord policy or should they be added as an additional insured?

No employees with any of these companies.

Thanks. I’m getting nowhere with local agents.

 

[Markthebroker]

You're not getting anywhere with local agents, likely because you aren't dealing with a commercial broker that is experienced with something like this. Most aren't.

More information is needed, but from the sound of it, the holding company needs professional liability policies, specifically d&o, and e&o. Depending on the ownership structure, there may be scenarios where you can have a policy that covers both the subsidiaries, and the holding company. Again, depending on the ownership structure, the best way to do it might be to have a business owners (basically a master "landlord "policy) extending from the holding company, to the subsidiaries, covering the properties, instead of individual "landlord" policies.

Again, this is way over the head of your typical agent.

What state are you in, and what state are the properties in?

 

[CaptainCaveman]

Hi and thanks for the reply. Yes I agree, this is way over their head, and this has been sort of something I've been interested in for the last ten years without much progress.

So each subsidiary that owns real estate has to have its own policy due to the lender. These are commercial loans and carry 1 million in general liability per landlord policy. Of course nobody can answer whether these policies cover members and managers automatically so I went ahead and added the managing entity and the holding entity as an additional insured just to be safe.

I do have an E&O for the holding company with the subsidiaries as an additional insured and it was acquired more so when it was more active in the management of the affairs of the subsidiaries. I'm not sure if this should now only be under the managing entity instead. In fact, I really don't know if E&O is for licensed professionals or if management companies qualify--there is a small chance one day we would get sued for an illegal eviction or something of that sort. Additionally, I ran on behalf of the Holding company for an HOA position where it at the time owned a condo, and so I thought maybe errors and omissions would be something that would benefit as the Board at the time was known to use Association funds to target the homeowners through the Associations legal counsel--they have since been removed by the division for improper behavior.

I'm in Nevada

Properties are in IN, CO, AL, FL, MS, AR,

Holding company is registered in FL

Management entity is registered in NV.

 

[marindependent]

In this scenario the company holds membership interests in other companies and does not actively participate in management.

Vs

It’s role is to manage the subsidiaries.

Which one is it?

 

[CaptainCaveman]

The holding company at this point only holds membership interest in the subsidiaries

The holding company holds a membership interest in a management entity

The management entity manages each subsidiary

 

[Markthebroker]

The banks require the properties to be insured in the name of the leinholder, they don't care if that policy also covers other properties other named insureds. I know, I write blanket policies all the time and deal with banks constantly, and have many policies covering multiple properties with commercial loans.

I suggest you research some mid to large agencies that have good reviews and are licensed in all 50 states.

 

[CaptainCaveman]

Vs


Which one is it?

Here is an outline.

 

[AZDave]

If it is same ownership (members) on the entitites, I would suggest adding the holding company as an 'additional named insured' on the underlying landlord policy's. Most carriers are willing to do this.

 

[CaptainCaveman]

Thank you