T-26 Guideline - TX Additional Insured Endorsement

Explanation:

This endorsement is primarily used in estate planning situations where title in individuals has been conveyed to a family trust or solely owned/family-owned legal entity. The endorsement must be requested by the additional insured. Texas Procedural Rule P-57 provides the basic rules for issuance of this endorsement.

Please also see Rate Rule R-33 for more information regarding this endorsement. 

To issue the endorsement in estate planning situations, the additional insured must be:

(a) a legal entity, a trust, or trustee of a trust, if the entity or trust is established by the insured for the purpose of planning the disposition of the insured’s estate to whom the insured conveys the title after Policy Date, or

(b) a distributee who has acquired an interest according to the terms of a legal entity, a trust,or trustee of a trust, if the entity or trust is established by the insured for the purpose of planning the disposition of the insured’s estate, or

(c) a partnership, limited liability company, or corporation solely composed of or owned by members of the insured's family and the insured.

To issue the endorsement for purposes of a-c above, the following is required:

(a) the request must be made within 90 days after the document conveying title to the additional insured is recorded, and

(b) the document conveying title to the additional insured must contain a warranty of title.

To issue the endorsement upon acquisition under an Existing Agreement, the additional insured must be:

(a) any partner, member or stockholder that acquires the interests of the other owners of the insured in accordance with the terms and provisions of a written agreement in effect at Date of Policy.

To issue the endorsement with the additional optional coverage for a limited liability company, the rule requires:

(a) there will be a transfer(s) of all or any part of the Limited Liability Company members' interests in the insured to any transferee(s), or

(b) the withdrawal(s) of one or more of the members from the Limited Liability Company, or

(c) the addition(s) of one or more persons or entities as members of the Limited Liability Company.

Underwriting Requirements:

We require:

1. A review of the trust, written agreement that allows for the acquisition of the interest of the other owners that was in existence at Date of Policy, the partnership agreement or corporations founding documents and any agreements such as bylaws and operating agreements.  This review should satisfy you that the documents allow the additional insured entry into the respective organization. 

2. For limited liability companies you need to review the founding documents and any later documents that create or allow the transfer of interest or withdrawal or addition of members.

3. The endorsement must be requested by the additional insured.

4. If the additional insured falls within the terms of the Estate Planning Vehicle, you must confirm:

a. the request for the endorsement is made within 90 days after the document conveying title to the additional insured is recorded, and

b. the document conveying title to the additional insured contains a warranty of title.

For further guidance, refer to the applicable subsections in Section 11.04 of the National Underwriting Manual on Virtual Underwriter.
https://www.virtualunderwriter.com/en/underwriting-manuals/2014-1/UM00000208.html