Insuring around is defined as the willful issuance of a
binder or policy showing no outstanding, enforceable liens against the property
described in Schedule A when, in fact, the issuer knows that a lien or liens are
of record against the property. ”Willful issuance” means intentionally
concealing information from the insured. Texas Procedural Rule (P-11)
has carved out specific instances where it is permissible, subject to sound
underwriting practices, to issue without excepting to the outstanding recorded
liens. ”Insuring around” is an extrahazardous risk and should be done with
Permitted Insuring Around Circumstances
- Where a lien is unreleased of record, but the underlying obligation has been discharged to the satisfaction of the Company or agent and either has evidence in its file that the lien was paid in full;
- Where you have funds escrowed and a recordable release is coming and will be filed for record;
- Where liens, in the opinion of counsel, are barred by the statute of limitations;
- Where liens are inchoate, not perfected, and the Company has a sufficient indemnity executed by a state or federally regulated financial institution, or the Company or you have sufficient funds to pay and obtain releases of the liens, and you have the written consent of the insured(s);
- Where mechanic's liens are filed and contested or disputed, the Company has a sufficient indemnity, or funds are escrowed to protect against the liens, and you have the written consent of the insured(s);
- Where the Company has liability under a prior policy and will not increase its exposure and you have the written consent of the insured(s);
- Where another company has liability under a policy, the Company may rely on an indemnity or agreement to defend and insure against the lien provided you have the written consent of the insured(s);
- Where federal estate and/or state inheritance taxes have not been paid, but the Company:
- determines the estate will have no trouble paying the taxes and the Company has an indemnity from the executors, administrators, or trustees of the estate, or
- has escrowed sufficient funds pending payment, or
- determines the estate can pay the taxes when due and the Company has a letter from a responsible person, such as an accountant or attorney for the estate stating that the taxes will be paid.
Company policy requires that you obtain the approval
of a Texas Underwriter prior to accepting any indemnity as outlined above. All
indemnities must run to the benefit of Stewart Title Guaranty Company.
Company policy requires that all escrows and escrow
agreements be approved by a Texas Underwriter prior to the acceptance of
funds by you. All escrowed funds must be deposited for the benefit of Stewart
Title Guaranty Company.
Insuring Around Letters
Some instances of insuring around require the execution of a written consent by the insured(s). The following letter is recommended for use.
INSURING AROUND CONSENT LETTER
GF NO. _______________________________________________________
Dear Proposed Insured:
In regard to the above captioned property, you are hereby notified that the item(s) shown on attached Exhibit “A” hereof, now appear of record and are unreleased.
Provisions for the payment of, release of, disposition of and/or appropriate indemnification of the above have been made in accordance with the provisions of Rule P-11, relating to “insuring around”, as set forth in Section IV of the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas. Accordingly, the aforesaid item(s) will not be excepted from the coverage afforded by the title insurance policy to be issued to you, thereby protecting your title against the effects of the attached.
Please affix your signature in the space provided for same below to indicate both your receipt of this notification and your consent to accept your title policy in accordance with the foregoing.
Yours very truly,
ACCEPTED AND AGREED:
Express insurance may be appropriate for some matters that may not comply with P-11 requirements. Please refer to Express Insurance, Section 5.30 and Bulletins TX000013 and TX000061
Effective November 1, 2005, the Texas Insurance Department promulgated a
Master Indemnity Agreement (T-29) for use from one underwriter to another.
Under this form, most consensual liens are automatically indemnified and no
separate indemnity letters are needed.