We own an existing sole proprietorship that is a small construction company. I will soon transition this to an LLC. We own (outright) several vehicles for business use. We also outright own several vehicles for personal use. I have a personal insurance policy for these, and a commercial policy for the biz vehicles.
Ive recently set up a holding company LLC with the intention of having it own the (soon-to-be) construction company LLC as a wholly owned subsidiary. Id also like to create a property management LLC which will also be wholly owned by the holding co. (Eventually to manage properties owned (in the future) by the holding co.
Id like to transition the vehicle ownership of the construction co vehicles the the holding co and then lease the vehicles back to the construction company. Id also like to transfer ownership of the personal vehicles to the holding co and lease them back to us personally.
In order to transfer ownership / titles of the vehicles to the holding co, the holding co needs proof of insurance in its name.
My question is this:
How does this work, exactly, and whats the best way of going about it? Does the holding co need to directly carry insurance on the vehicles? Or is this arrangement altered via the lease agreement so that the insurance burden is on the leasee? Our current insurance carrier says they cant insure the vehicles if the holding co owns them since the holding co will be deriving its income from "leasing vehicles". Do I just need to find another carrier? Or should the policies be held by the entities leasing the vehicle? <---this seems right, but how does the holding co still own the vehicles without direct coverage?
Thanks for any clarification you can offer. I feel like Im close to understanding how this works, but maybe Im missing some crucial piece of info. :)
Cheers,
~M
Ive recently set up a holding company LLC with the intention of having it own the (soon-to-be) construction company LLC as a wholly owned subsidiary. Id also like to create a property management LLC which will also be wholly owned by the holding co. (Eventually to manage properties owned (in the future) by the holding co.
Id like to transition the vehicle ownership of the construction co vehicles the the holding co and then lease the vehicles back to the construction company. Id also like to transfer ownership of the personal vehicles to the holding co and lease them back to us personally.
In order to transfer ownership / titles of the vehicles to the holding co, the holding co needs proof of insurance in its name.
My question is this:
How does this work, exactly, and whats the best way of going about it? Does the holding co need to directly carry insurance on the vehicles? Or is this arrangement altered via the lease agreement so that the insurance burden is on the leasee? Our current insurance carrier says they cant insure the vehicles if the holding co owns them since the holding co will be deriving its income from "leasing vehicles". Do I just need to find another carrier? Or should the policies be held by the entities leasing the vehicle? <---this seems right, but how does the holding co still own the vehicles without direct coverage?
Thanks for any clarification you can offer. I feel like Im close to understanding how this works, but maybe Im missing some crucial piece of info. :)
Cheers,
~M
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