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Texas Business Organizations Code - Section 8.151. Insurance And Other Arrangements

Legal Research Home > Texas Lawyer > Business Organizations Code > Texas Business Organizations Code - Section 8.151. Insurance And Other Arrangements

§ 8.151. INSURANCE AND OTHER ARRANGEMENTS.  (a) 
Notwithstanding any other provision of this chapter, an enterprise 
may purchase or procure or establish and maintain insurance or 
another arrangement to indemnify or hold harmless an existing or 
former governing person, delegate, officer, employee, or agent 
against any liability:
		(1)  asserted against and incurred by the person in 
that capacity;  or      
		(2)  arising out of the person's status in that 
capacity.                   
	(b)  The insurance or other arrangement established under 
Subsection (a) may insure or indemnify against the liability 
described by Subsection (a) without regard to whether the 
enterprise otherwise would have had the power to indemnify the 
person against that liability under this chapter.
	(c)  Insurance or another arrangement that involves 
self-insurance or an agreement to indemnify made with the 
enterprise or a person that is not regularly engaged in the business 
of providing insurance coverage may provide for payment of a 
liability with respect to which the enterprise does not otherwise 
have the power to provide indemnification only if the insurance or 
arrangement is approved by the owners or members of the enterprise.
	(d)  For the benefit of persons to be indemnified by the 
enterprise, an enterprise may, in addition to purchasing or 
procuring or establishing and maintaining insurance or another 
arrangement:
		(1)  create a trust fund;                                                     
		(2)  establish any form of self-insurance, including a 
contract to indemnify;
		(3)  secure the enterprise's indemnity obligation by 
grant of a security interest or other lien on the assets of the 
enterprise;  or
		(4)  establish a letter of credit, guaranty, or surety 
arrangement.         
	(e)  Insurance or another arrangement established under this 
section may be purchased or procured or established and maintained:
		(1)  within the enterprise;  or                                               
		(2)  with any insurer or other person considered 
appropriate by the governing authority, regardless of whether all 
or part of the stock, securities, or other ownership interest in the 
insurer or other person is owned in whole or in part by the 
enterprise.
	(f)  The governing authority's decision as to the terms of 
the insurance or other arrangement and the selection of the insurer 
or other person participating in an arrangement is conclusive.  The 
insurance or arrangement is not voidable and does not subject the 
governing persons approving the insurance or arrangement to 
liability, on any ground, regardless of whether the governing 
persons participating in approving the insurance or other 
arrangement are beneficiaries of the insurance or arrangement.  
This subsection does not apply in case of actual fraud.

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.                     

Last modified: August 11, 2007