 |
Title insurance is sort of like
homeowners insurance right?
Wrong. Most people are familiar with
one kind of insurance - casualty insurance -
and assume that all insurance works the same
way. It doesn't, and this misunderstanding
causes confusion. We hope these questions
will help clarify the difference between
title insurance and casualty insurance.
Isn't all insurance basically the
same?
To the extent that buying insurance
protects you from the costs of unforeseen
events and losses, yes, insurance is
insurance. You buy homeowner's insurance in
case a burglar breaks into your house, auto
insurance to cover repairs after an
accident, and life insurance to pay for your
child's education if you are not there.
These are all varieties of casualty
insurance.Land title insurance protects you,
too, but it covers a different kind of loss,
and its one- time premium pays for much more
than simple risk protection. In short, not
all insurance is the same.
What does title insurance cover?
Land title insurance protects you
from events which may have happened in the
past, not events that are likely to occur in
the future, as does casualty coverage like
automobile, fire, and flood insurance. Title
insurance charges are based on a cost - per
- $1000 of the property to protect the
homeowner from claims which could jeopardize
all or part of his property.
Some common losses? Records misplaced in
courthouses, boundary disputes, unpaid
taxes, and hidden defects in the title like
missing heirs, forgery, fraud and other
items which do not show up in the most
exhaustive title search.
What about the premium?
One of the most common ways to
arrive at insurance premiums is to forecast
likely losses and add administrative
expenses and profit. It is not unusual for
90% of the premium amount to be paid out for
claims.
In the title insurance business, on the
other hand, we may pay out only 8% to 15% of
the fee for claims, and people often assume
that the rest is profit. But only a small
part of the one-time fee paid at settlement
is for insurance; the remainder is the cost
of conducting the many different searches
required to show a clear title to the
property.
Am I protected?
Even the most intensive search
cannot avoid claims.
Suppose there are back taxes owed on a
property. We go into the local courthouse,
review the tax files, and find no evidence
of these back taxes because a file is
missing. We then insure the property and the
tax claim pops up. We pay 100% of that
claim.
Without title insurance, the owner must pay
claims like these. Liens, unpaid taxes, and
sewer and water are assessments that are
attached to the property - not to the person
incurring the delinquency. If a previous
owner had a judgment against his property,
the new owner is responsible for payment. We
insure against these circumstances.
I’m refinancing. Do I still need title
insurance?
When you refinance you are obtaining
a new loan, even if you stay with your
original lender. Your lender will require
lender's title insurance to protect their
investment in the property. You will not
need to purchase a new owner's title policy;
the one you bought at closing is good for as
long as you and your heirs have an interest
in the property.
Even if you recently purchased or refinanced
your home, there are some problems that
could arise with the title. For example, you
might have incurred a mechanics lien from a
contractor who claims he/she has not been
paid. Or you might have a judgment placed on
your house due to unpaid taxes, homeowner
dues, or child support, for instance. The
lender needs reassurance that the title to
the property they are financing is clear.
|
|
 |
 |
 |
 |
| |
 |
|
Since our inception, our focus has always been to
provide our customers with the most accurate
information available as efficiently as possible. We
utilize cutting edge technology to put our expertise
at your fingertips. |
| |
|
