Legislative Changes to Texas Title Insurance: Continuation of Coverage

Beginning January 1, 2010, owner's title insurance policy on residential real property will provide for continuation of coverage beyond the original named insured in the following circumstances:

(1) to a person who inherits the title to the original named insured's real property on the original named insured's death;

(2) to the original named insured's spouse who receives title in a dissolution of marriage with the original named insured;

(3) to the trustee or successor trustee of a trust established by the original named insured to whom the original named insured transfers title after the date of the policy; and

(4) to the beneficiaries of the type of trust as in (3) on the death of the original named insured.

These continuations of coverage benefit the Texas residential property owners greatly, allowing Texas title insurance to adjust to the events of death and divorce--which our modern society cannot seem to avoid. Additionally, by extending the continuation of coverage to a trust created by the original named insured, Texas residential property owners have greater freedom to conduct nontestamentary planning without losing the benefits they receive under their title insurance policy.

Finally, these changes by the Texas legislature probably bring the law and title insurance coverage more in line with the Texas residential property owner's expectations for when they should be able to rely upon their title insurance policy for protection. I am willing to bet most people already think their title policy covers them in these situations and would only find out when they would file a claim and their lawyer breaks the bad news to them. The legislature made a good change.

To read the new statute, see Tex. Ins. Code § 2703.101(g).