STG Non-Cumulative Liability Endorsement Guideline 1

Explanation:

The Owner's and Loan Policies contain non-cumulative liability provisions. These clauses provide that where payment is made under a Loan Policy and a mortgage executed by the insured, payment under the Policy reduces pro tanto the amount of insurance coverage under the Owner's Policy. However, the non-cumulative liability provisions would not apply in circumstances such as where an Owner's Policy was issued to the seller and simultaneously issued to the buyer, where an option policy is issued to an optionee and a separate Owner's Policy is issued to the optionor, where a leasehold policy is issued to a lessee and an Owner's Policy is issued to the fee owner, or where an Owner's Policy is issued to the lessee and a separate Owner's Policy is issued to a sublessee. In such circumstances, full payment must be made for the separate policies and the liability accumulated in order to determine whether reinsurance is applicable or, in the alternative, adequate non-cumulative liability provisions must be inserted in all of the policies of relevance.

Underwriting Requirements:

(1) Underwriter approval must be secured in order to rely upon the non-cumulative liability provisions; and
(2) If the non-cumulative liability provisions contain notice requirements, then the Underwriter must review the notice provisions.