The anonymous post on April 21, 2009 is correct (as is most of the information in this blog thread). The stats are readily available to all title agencies (they just don’t like to disclose it). And since these companies are publicly traded companies, you can also find it in their financial statements. The 2-3% claims are just minor corrections that are not complicated to correct. That’s why you may see indemnity letters at the closing table on occasion. Complicated title issues that may need some work, are closer to 0.001% claims.

This comes from a former CRESPA certified title agent with both a background in real estate and mortgage lending. I have purchased over 12 pieces of real estate. Both homes as investments and primary residencies, as well as commercial property. And, you will be interested to know that, I have never opted to buy the owner’s title policy. And yes, I did end up having title issues on one of the properties. However, we got a couple of signatures from previous owners and the problem was fixed in a matter of days….as is usually the case.

I wouldn’t go as far as calling title insurance a scam. Although, the sale of title insurance is illegal in the state of Iowa. However, I do believe it is one of the most profitable types of insurance policies in the whole insurance industry….along with baby life insurance (go Gerber!). At the end of the day, warranties and insurances are just a peace of mind payment that most people (at least Americans) are willing to pay.

It would be nice for there to be more disclosure to have a better informed consumers. But their lobbying is strong…and the reality is that the title companies would not be highlighting the stats all that well anyways, if a disclosure ever came about.

In 2008 they wrote 63 million in policies, and had reserves of 15 million (insurers create a reserve when they write a policiy to pay for expected future claims).

So while it doesn’t tell you how many claims they expect to be made, it does tell you that they expect to pay out about 25% of premiums. The key is like all insurance, it’s over priced (very few insurance products aren’t priced with an underwriting profit) but the costs of having a claim should be weighed against your fiances (so people with bigger liquid savings should require less insurance).

Lenders $1,176 $1,000
Owners Standard $2,529 $1,500
Owners Enhanced $3,075 $1,900

Thanks!

The settlement company even suggested it. I basically said, “hey, I got a quote for thousands less, um, I think I might use theirs instead,” and they came back saying they’d match it if we stuck with theirs. All they requested was a copy of the quote. For example, on a $435K property, I got a combination lender/owner policy for $825.80 (and of that, the optional owner’s portion was only about $300). The settlement company’s policy was going to be about $2400, and yes, I compared the coverage on both and they were essentially the same.

There have been properties I had declined buying it for in that past (my lender said it was a joke), but now I figured if I can get it for an extra $300 bucks it’s definitely worth my peace of mind. So it may not hurt to shop around and ask the closing company about it…
(BTW, I’m in VA)