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This applies to general liability, auto, and umbrella liability. In the Section II – Who is An Insured section of the ISO based forms, part 1.c states “Your members are also insureds…” However part 4 states “No…organization is an insured with respect to the conduct of any current… limited liability company that is not listed as a Named Insured in the Declarations.” So if one LLC is a member holding interest in another LLC, and not a listed Named Insured on a liability policy, is the holding LLC covered for liability related to the other LLC’s operations as a member or excluded by part 4?

Stacked LLC seems to be common but not all clients identify their members individually just as most corporations do not identify their stockholders individually. My particular issue is a client who has given me a flow chart showing that one LLC (1) has majority control of two other LLC’s (100% on one(2) and 95% on the other(3)). There are no individual people involved in ownership.  The 95% owned LLC (#3) then controls 100% of a fourth LLC(4). The 100% controlled LLC(#2) and the 95% interest LLC (#4) have active operations selling products to the public. The majority holding LLC (#1) is the US subsidiary of an Irish company that has not been identified. So I am assuming the controlling LLC (#1) is considered the member and manager of the “subsidiary” LLC’s. To complicate a little more, a former CEO is the minority member, possibly a limited member, of the remaining 5% of #4 through another LLC (5) in which we do not know the members.

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