Opting Out of Title Insurance

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Sorry to disappoint, but title insurance claims are not so low. Read the earnings (lack thereof) announcements of the title underwriters. They are all adding hundreds of millions of dollars to the claims reserves. They’re not doing that because they want to. They're doing it because they have claims to pay.

Peter A. of VA 11:10PM June 22, 2008

Title Insurance also covers many things that a search (current owner or full) will not reveal. I agree that while sitting at the settlement table you may wish that you had that money to spend on something else, but how will you feel when the heir of an owner two deeds back comes knocking on the door to inform you that his mother's signature was a forgery and you do not have the right to own the property? While the additional title premium you paid may have felt tight at the time, it bought you coverage in the amount of the purchase price of the property, NOT just the equity you had at closing. Your lender will be protected, but you won't.
You may or may not have access to the title search results, however, title insurance covers MUCH more than just what shows up in the search. Title Insurance is a necessary way to protect what will probably be the biggest investment of your life

Leslie of PA 12:42PM June 20, 2008

You should read the article again. There are rip-offs a plenty in a purchase/sale transaction, but the title agent is way at the bottom of that pile. Look at the guys making the big money and you will find your rip-offs.

Sandra of PA 4:32PM June 19, 2008

In response to Jane of CA, the buyer does not have access to the results. Because of the massive amount of purchase and refinances in the last several years, the searches that have not been necessarily the highest of quality. The lenders wanted quick turn-around and did not want full searches. They only wanted current owner searches which means that there could be unreleased mortgages that have superior rights over the current mortgage holder. if the prior unreleased mortgage holder was not paid off or an open line of credit not closed, they could foreclose which leaves the current owner without recourse because the lender would be the only one covered under the lender policy.
Also, the reason that there are so little claims paid out is because the local title agent usually pays for it out of their pocket instead of making a claim to the underwriter.

Andy Maloney of TN 4:30PM June 19, 2008

jane of CA talks about the fact that an upfront investigation of the title has taken place for the lender and the "buyer hasaccess to the results." leading her to conclude the owner doesn't need the coverage. Unfortunately, she overlooks the fact that although the owner may have access, he has no insurance. If there is an off record claim such as a forgery or fraud or identity theft, only the lender would have recourse under these facts. The owner would be left to his own legal fees and battles.

Isidore Teitelbaum of NJ 4:26PM June 19, 2008

You don't buy fire insurance because you expect a fire. You buy fire insurance in case of a fire. The same thing is true with title insurance. You HOPE you will never need it, but with all the problems with titles, including identity theft, theft of funds, and those all too common mistakes in recording (and not recording1) complex real estate documents, I sleep better at night knowing I don't have to worry.

Jeanine of FL 4:05PM June 19, 2008

The purchaser/borrower is already paying for a loan policy. The incremental cost for an owner's policy is very small. Mr. Rutzick thinks he saved $3,600 by not getting a title policy. I doubt it was that much but let's say he's right. That's a one time payment that insures him as long as he has an interest in the home or liability after he sells it. How much did he pay for a homeowner's policy? $2,500 for one year subject to cancelation if the insurer suffers too many losses in the same area. I imagine the risk of his house burning down is pretty small. I've owned houses for over 30 years and have never submitted a claim yet. Maybe Mr. Rutzick should cancel his policy and self insure over that risk.

Peter Walther of VA 8:56AM June 19, 2008

Home buyers are encouraged to pay thousands of dollars for title insurance, even when their equity at the time of purchase is tiny. I was offered a 1.5K title policy on 40K in equity.
The fact that "cost of title insurance includes an upfront investigation into potential problems" is used to justify paying for insurance, but the lender is already paying for this investigation, and buyer has access to the results. The whole deal seems to be an industry-wide consumer rip-off by design.

jane of CA 3:49PM June 18, 2008