Insurance Claims And Issues

Title Insurance: Pricing, Products Coverage Confusing to Many.

    Title Insurance Policies, including Premiums and various Products' Insurance Coverage, are examined in Binyamin Appelbaum, "Title Insurers Face Criticism Over Pricing/Do You Really Need an Owner's Policy?" (Boston Globe, Sunday, April 13, 2008).   In Massachusetts, as in many States or Commonwealths, it is mandatory to purchase a Title Insurance Policy at the closing on a real estate deal for a house, for example, that protects the lender.  It is ordinarily optional, however, to also purchase a Title Insurance Policy that protects the buyer-owner.  The two kinds of Title Insurance provide different Coverages and they come with different Premiums, all touched upon in the linked newspaper article.

Please Read The Disclaimer.

And the Title (Insurance) Belongs To ... Who, Exactly?

    Title Insurance can be a confusing thing.  It is certainly not unknown, because it is reportedly a part of "virtually every real estate transaction," but it is certainly confusing to many people in many respects.  To some degree, participants in the process of obtaining it and explaining it  sometimes seem to intend for it to be that way.

    Title Insurance exists in basic terms to address or "cover" defects in title.   Here is a popular explanation of what Title Insurance is intended to cover: "Defects in title include errors or omissions in deeds, mistakes in examining records, forgery, liens for unpaid taxes or contractor's bills, conflicting wills related to the home and missing heirs who suddenly appear and claim to own the property."   This is what was posted by the Los Angeles Times Online on Friday, February 8, 2007 in an article bylined and entitled Scott J. Wilson, "The Title Insurance Toll/Consumers Usually Trust Recommendations From Real Estate Agents, Lenders and Builders -- And Risk Choosing Insurers Who Give Kickbacks to Boost Business" (Los Angeles Times Online, Fri., Feb. 8, 2008).

    The price of Title Insurance in California is reportedly $1,200.00 - $2,000.00 for a $500,000.00 house.  Those figures would make the Premium at something like a 1/250 ratio of Premium for Title Insurance/Sales Price of the Property.  However, it is also reported in the above article that for "a house with a $400,000 mortgage, the policy would usually cost $500 to $600."  That would be a ratio of more like 1/800 or 1/700.

    In Iowa, the $500,000.00 house bears a Title Insurance Premium of $110.00 through Title Insurance run by the Iowa State Government.  Other costs -- including lawyers -- reportedly raise the total to around $500.00.  At the higher figure of $500.00, that ratio of Title Insurance Premium/Sales Price of the Property would be 1/1,000.  Do not get too excited.  Iowa is the only one of the 50 States to provide a "title insurance program" that is run by the government.

    In 2006, Title Insurance Companies reportedly drew in revenues of $16,600,000,000.00 or $16.6 Billion.  Revenues including Premium monies have undoubtedly declined since the subprime collapse, but figures are not reported in the linked newspaper article.

    Whatever the decline in Title Insurance Company revenues in 2007, it is not because of paying claims, apparently.  "While auto and homeowner insurers return about 70% of their premiums to customers in claims, title insurers pay out just 5%."  The article linked above was apparently so good, that the Los Angeles Times Online offered a Sunday version, to which you can link here:  Scott J. Wilson, "The Trouble With Title Insurance/Consumer Groups Say Policies Are Overpriced; Home Buyers Have Little Choice But to Pay" (Los Angeles Times Online, Sunday, Feb. 10, 2008).

   

Please Read The Disclaimer.

Unexpected Jobs Decline Hits Title Insurers: What Effect on Coverage?

    Before Friday, September 7, 2007 many economists expected the United States economy to add 100,000 jobs in the preceding month.  Instead, the U.S. economy lost 4,000 jobs in August, 2007.

     It is reported that service industries, a category which includes most Insurance Companies, ran counter to the payroll reductions event and added 60,000 jobs in August, 2007 after adding 78,000 workers to the payrolls in July, 2007.

    Two Title Insurance Companies, however, are reported to have indeed lost workers and reduced their payrolls.  They are apparently displaying the continuing effects of an economy in which fewer people are purchasing either homes or title insurance:  First American Corporation, said to be the largest Title Insurance Company  in the United States, and LandAmerica Financial Group Inc.  First American reportedly has reduced or will reduce its payroll by no longer employing 1,300 people; the number of workers sent home by LandAmerica is reportedly 1,100.  See Bob Willis, "U.S. Economy:  Employment Unexpectedly Drops in August (Update 7)" (Bloomberg.com, Friday, September 7, 2007).

     Time will tell what effects, if any, fewer people working at Title Insurance Companies will have on Insurance Coverage Claims on Title Insurance Policies particularly if, in the future, the U.S. economy makes Claims more attractive.

                                                   Please Read The Disclaimer.