Understanding Title Insurance
Title insurance offers protection to the named insured against losses arising from discrepancies in the title to a property, which may differ from what is stated in the policy. Unlike other insurance types that offer protection against future hazards, title insurance provides coverage for the past. Another unique feature of title insurance is that it requires a one-time premium payment, in contrast to most insurance plans that require recurring payments. In almost all real estate deals, buyers and/or lenders require title insurance to safeguard their interest in the property. Although claims are infrequent, they can result in significant financial losses.
Scope of Title Insurance
In the process of acquiring title insurance, the title company conducts a comprehensive search of the property records and prepares a title commitment that outlines the coverage provided by the policy, subject to any liens or encumbrances that may appear against the title when the policy is issued. The title commitment also includes a set of requirements that must be met before the policy can be issued. For instance, the company may require that any existing liens be paid off before issuing the policy without exception.
Typically, when a property is sold, any outstanding loan secured by a deed of trust or mortgage is paid off to allow the new buyer's loan to be secured in the first lien position. However, there may be other liens and encumbrances, such as judgment liens, lis pendens, mechanic's liens, tax liens, covenants, restrictions, easements, and rights-of-way, that could be discovered during the title search.
Moreover, title insurance offers coverage against numerous hidden risks that are not discoverable through a title search. Such hidden risks may include losses caused by forgery, incompetence or incapacity of the parties, fraudulent impersonation, and unknown errors in the records.
Title Insurance Underwriters and Agents
Title insurance, like other forms of insurance, can be procured either directly from the underwriter or through an agent representing the underwriter. Regardless of whether the policy is purchased directly or through an agent, it is underwritten by the same company, and the cost of the policy remains unchanged. However, the closing fees may vary depending on the chosen agent or underwriter.
Choosing a local agency like Polk County Abstract can offer benefits such as lower closing fees and superior customer service. Despite using an agent, the consumer still obtains the same title insurance policy underwritten by the same company.
Important Considerations When Selecting Underwriters and Agents
When choosing a title insurer, it is essential to consider the financial stability of the underwriter. This factor determines the underwriter's capability and willingness to cover claims that may arise. In addition, it is crucial to assess the experience and track record of the selected agent.
Polk County Abstract, which commenced operations in 1845, boasts an impeccable record, making them an excellent option to consider.