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Title Insurance – Where Does Your Dollar Go?
By Matt Unangst, 23 Jan 16:00
• Title Companies focus on risk elimination
• One-time premium to eliminate risks before they can happen
• Title Companies search records to make sure there are no other claims to the property
• Most fees go to pay for this labor-intensive process
• Title Companies are required to post their fees
Most insurance that you buy is meant to cover you from expected risks that you will face in the future. Medical and casualty insurers expect the people they insure to incur costs that they will have to cover at some point in the future. Title insurance is different. Title companies focus on eliminating risk at the beginning so that they (and you) will not have to pay any money later.
Central to this strategy of risk elimination is the maintenance of a database of property information. Title companies put huge amounts of effort into searching public records for information. The information they find goes into a database so that they can easily access it. Information in this database includes things such as recorded liens, legal actions, disputed interests, and rights of way, among many others. The title company will attempt to remove all of these encumbrances from your property record before you take possession of the property, allowing you to avoid any hassle from them later on.
A title company’s database, known as a Plant, is the result of countless hours of work. Plants often date back over 100 years and are updated daily in order to insure rapid response to any problems. Many plants have been computerized in recent years, making the data retrieval process even faster than it was before.
Because title companies aim to clear up all possible problems before they start, you pay just a one-time premium for title insurance. This premium covers your ownership and the ownership of any of your heirs.
It is impossible to completely eliminate all risk tied to a property, so title companies keep a staff of trained claims professionals to assist you a problem with your title does arise later.
In California, title companies are required to publicly post their schedule fees. Rates vary from company to company, so you should comparison shop before deciding on a title company. Ask your real estate agent for help in deciding between title companies. In addition to their insurance services, title companies also provide a number of other helpful services for buying or selling a home.
Most of your title insurance premium is going to pay for building up and maintaining the plant. An incredible amount of work and money goes into making sure the plant is up to date and extensive as possible. You are also paying for the title company’s evaluation and legal interpretation of any information they find. A small portion of your money goes to pay for the title company’s claims department, which rarely has to be called into service.
KEYWORDS: title insurance, title company, title plant, insurance, buying a home, buying a house
SEE ALSO: Title Insurance, The History of Title Insurance in California, Common Ways of Holding Title, Insuring Home Ownership
Tags: title insurance