Title Insurance - Where Does Your Dollar Go?
Title Insurance: As a homebuyer, the term is probably familiar -- but is it understood?
What is your dollar actually paying for when you purchase a title policy?
Title Insurers, unlike property or casualty insurance companies, operate under the theory
of risk elimination. Title companies spend a high percentage of their operating income
each year collecting, storing, maintaining and analyzing official records for information
that affects title to real property. Their technical experts are trained to identify the rights
others may have in your property, such as recorded liens, legal actions, disputed
interests, rights of way or other encumbrances on your title. Before closing your
transaction, the title company will proceed to "clear" those encumbrances which you do
not wish to assume.
This theory is different from that of most other insurance where, for example, rates and
anticipated losses are based on actuarial studies and premiums are pooled on the
assumption that a certain number of claims will be made. The distinction is important:
title insurance premiums are paid to identify and eliminate potential risks and claims
before they happen. Medical and casualty insurance premiums, for example, are paid to
insure against an unpredictable future event, knowing that risks exist and claims will
occur. Furthermore, title insurance involves a one-time premium, paid when you close
the real estate transaction, while property, casualty and medical insurance require
regular renewal premiums.
The goal of title companies is to conduct such a thorough search and evaluation of
public records that no claims will ever arise. Of course, this is impossible -- we live in an
imperfect world, where human error and changing legal interpretations make 100
percent risk elimination impossible. When claims arise, professional claims personnel
are assigned to handle them according to the terms of the title insurance policy.
As in all competitive business environments, rates vary from company to company, so
you should make comparisons before deciding on a particular title company. Your real
estate professional can help you do this. In addition, there are many helpful customer
services provided by title companies which you and your real estate professional may
find helpful to your transaction.
The issuance of a title insurance policy is highly labor-intensive. It is based upon the
maintenance of a title "plant," or library of title records, in many cases dating back over a
hundred years. Each day, recorded documents affecting real property and property
owners are posted to these title plants so that when a title search on a particular parcel
is requested, the information is already organized for rapid and accurate retrieval. This
investment in skilled personnel and advanced data processing represents a major part
of the title insurance premium dollar.
Article by CLTA
What is your dollar actually paying for when you purchase a title policy?
Title Insurers, unlike property or casualty insurance companies, operate under the theory
of risk elimination. Title companies spend a high percentage of their operating income
each year collecting, storing, maintaining and analyzing official records for information
that affects title to real property. Their technical experts are trained to identify the rights
others may have in your property, such as recorded liens, legal actions, disputed
interests, rights of way or other encumbrances on your title. Before closing your
transaction, the title company will proceed to "clear" those encumbrances which you do
not wish to assume.
This theory is different from that of most other insurance where, for example, rates and
anticipated losses are based on actuarial studies and premiums are pooled on the
assumption that a certain number of claims will be made. The distinction is important:
title insurance premiums are paid to identify and eliminate potential risks and claims
before they happen. Medical and casualty insurance premiums, for example, are paid to
insure against an unpredictable future event, knowing that risks exist and claims will
occur. Furthermore, title insurance involves a one-time premium, paid when you close
the real estate transaction, while property, casualty and medical insurance require
regular renewal premiums.
The goal of title companies is to conduct such a thorough search and evaluation of
public records that no claims will ever arise. Of course, this is impossible -- we live in an
imperfect world, where human error and changing legal interpretations make 100
percent risk elimination impossible. When claims arise, professional claims personnel
are assigned to handle them according to the terms of the title insurance policy.
As in all competitive business environments, rates vary from company to company, so
you should make comparisons before deciding on a particular title company. Your real
estate professional can help you do this. In addition, there are many helpful customer
services provided by title companies which you and your real estate professional may
find helpful to your transaction.
The issuance of a title insurance policy is highly labor-intensive. It is based upon the
maintenance of a title "plant," or library of title records, in many cases dating back over a
hundred years. Each day, recorded documents affecting real property and property
owners are posted to these title plants so that when a title search on a particular parcel
is requested, the information is already organized for rapid and accurate retrieval. This
investment in skilled personnel and advanced data processing represents a major part
of the title insurance premium dollar.
Article by CLTA
Still have questions? Contact me today for a
free consultation!
free consultation!
Colin O’Neal
Buyer’s Agent
200 Rufe Snow North, Suite 202
Keller, TX 76248
(817) 898-0145 Office
(817) 898-1771 Fax
colin@househuntersdfw.com
Buyer’s Agent
200 Rufe Snow North, Suite 202
Keller, TX 76248
(817) 898-0145 Office
(817) 898-1771 Fax
colin@househuntersdfw.com
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