The following comes from guest blogger Thad Armstrong, one of my colleagues in the T&K real estate group. For more information, please contact Thad at 713-951-5834
or thad.armstrong@tklaw.com.Effective November 1, 2009, Texas title companies will have the right to elect whether to exclude or except minerals from coverage. This new rule is the result of months of controversy over the recent trend of title companies to exclude minerals from coverage arguably in violation of the previous rule requiring any exceptions to coverage to be specific in nature rather than broad or general. If the title company elects to exclude minerals under the new rules, a broad "carve out" will be made from the description of the insured property. If the title company elects to except minerals from coverage, a similar broad exception will be made on Schedule B of the policy. If the title company makes either election, it will be required to offer the new T-19.2 and/or T-19.3 endorsements. These endorsements are similar to the existing T-19.1 endorsement in that each offers the insured protection against certain damages resulting, for example, from mineral exploration on the property. There are, however, significant differences. First, the new endorsements offer better coverage for damage to buildings and other improvements on the property. Second, the new endorsements are less expensive – a flat $50.00 for each parcel of land covered by the policy, whereas the cost for the T-19.1 endorsement is 10% of the policy premium.
