Saving Money on Title Insurance
Lisa Prevost’s “Saving Money on Title Insurance” highlights the perspective of most home buyers when it comes to paying for title insurance at a real estate closing. No doubt, title insurance is among the higher costs associated with purchasing real estate and for good reason. Unlike other types of insurance which are generally paid annually and are subject to increase over time, the title insurance premium is only paid one time yet provides coverage for the entire time a home is owned. The amount of work and risks assumed by title insurance agents in completing the due diligence required in order to issue and title insurance policy is hardly reflected in the premium, but certainly reflected in the high cost of liability insurance for these professionals as mistakes related to issuing title insurance are among the costliest of all legal claims. Not to mention the fact that, notwithstanding the fact that a title agents role in connection with a closing is generally limited to making sure that title to the property is properly conveyed, is it not unusual for parties to a dispute arising in connection with a real estate closing to name the title agent, merely as a matter of practice in the hopes of receiving a nuisance settlement. This fact is evidenced by the unprecedented increase in title insurance claims following the burst of the real estate bubble and onslaught of foreclosures, many of which involved borrower defenses and counter-claims naming the title insurance agent. Home buyers are wise to read and understand their title insurance policy, and especially exclusions to coverage. And to consider the merits or hiring a real estate attorney verses a title company or a title company affiliated with their Realtor, lender or home builder verses an independent title company. But reducing title insurance rates would only serve to drive the most qualified agents, many of whom are already under-paid and overly at risk, from the industry.