Title insurance covers risks relating to the title for the insured. It knows by the most of us. However, the problem is what exactly it covers. In this article, we will see what risks can cover by a title insurance policy.
- Legal claims: How the title insurance company handles the legal claims, statement is the last item in a title insurance policy. When there is any insured defect arises, the company reserves the right either to fight the claim in court or to pay the loss. If the company decided to fight, the legal costs will take care by the company. These costs are addition to the coverage mentioned in the policy. If the company decided to pay the loss, the coverage amount is reduced with that amount, if there is any unused coverage is still in effect. The company acquires the right to collect the loss amount from the party who caused the loss when the company pays a loss.
- Forgery and fraud: The forgery or fraud is the hidden examples for title hazards. Except in the case of taking most careful precautions, these will remain undetected. When a forgery or fraud is occurred, the owner’s policy will protect financially.
- Assuring market title: The title insurance makes the titles to land as much more marketable. The marketable title is a kind of title, which is reasonably free of litigation. The seller agrees to deliver the marketable title to the buyer in almost all real estate transaction. Courts normally require the marketable title be conveyed even the seller not mention the quality of the title. For instance, the seller given an abstract and it is certified by an attorney as showing marketable title after he read. By reading on it the buyer’s attorney felt certain technical defects in that title chain are contradict for certification for marketable and advises the buyer to refuse to complete sale. The opinion between marketable and not marketable is common among the attorneys. If the defects are small and less risky, the insurance company accepts it. If the defects are risk, the insurance company may recommend a quit title suit or increase the insurance fee or may accept the risk.
- Premiums: The title insurance companies pay only a small part of the collected premiums as claims. This is because the companies take great pains for the title search process. They have to maintain on their own premises with complete photographic copies sometimes even with computer indexed of public records. It is for each county where they are doing business. These are often called as title plants. In many cases these records are actually maintain with better and complete organized available than the public records offices. The simple logic is the better the quality of the company’s title search, the fewer the claims that the companies paid.
It is better to ask the seller that what exactly they are providing for the coverage. Remind first check for the basic plan, in extended coverage policies you may get a greater coverage.