CONTRACTS, AGREEMENTS, AND OTHER DOCUMENTS

(a) On approval of an application, the board shall enter into a contract with the issuer for the insurance of the bonds on terms and conditions agreed to by the parties. The terms and conditions must comply with this subchapter and rules adopted by the board. (b) The insurance contract shall include: (1) the extent of the insurance coverage; (2) the terms and conditions of the insurance coverage; (3) rights in addition to those provided by law reserved by the board against the issuer in the event the board must pay all or part of the insurance coverage; and (4) any other provision required in order to be in compliance with the board's rules. (c) The board shall execute any other documents necessary to legally bind the state to insure payment to the bondholders on default or impending default. (d) For the insurance coverage of bonds to be effective, it must be approved by the attorney general as to the legality of the insurance coverage. Documents relating to the insurance of the bonds shall be submitted to the attorney general for approval at the same time as the bonds and records relating to the issuance of the bonds are submitted for approval. The bonds issued by a political subdivision or water supply corporation and the insurance coverage approved by the board are valid, binding, and incontestable after: (1) approval by the attorney general; (2) registration by the comptroller; and (3) payment by and delivery to the buyer.