Caveat Emptor When Buying Homeowners Insurance (and Title Insurance too)!

By | December 17, 2020

Caveat Emptor by Nick Youngson CC BY-SA 3.0 ImageCreator

Insurance To Protect Your Home: Educate, Educate, Educate!

Whether you currently own a home or will become a homeowner in the near future, more likely than not (and 100% if you have a mortgage) a homeowners insurance policy will be purchased to protect against the damage that can be inflicted by such risks as flood, fire and other occurrences!

Costs vary depending on underwriter, coverages, deductibles, exclusions and any number of other factors buried in the small print that, as I age, seems to be getting smaller all of the time. The willingness to cover a claim, customer service, responsiveness, etc. can and will typically vary by underwriter and agent who sold the policy to you.

Therefore, some of the factors to consider when buying a homeowners insurance policy includes the strength of the underwriter, the proximity of the agent, reputation of the agent/underwriter and of course the cost and affordability of the policy.

Monica Liang-Allen with World Insurance Associates advises, “Having a detail-oriented insurance broker to go through the different coverages of a Homeowners insurance quote and policy is very important. There are coverages that a homebuyer may not even be aware about (Water Back Up of Sewers and Drains, Loss Assessments, Service Line, Loss of Use/Additional Living Expense, and more). It is up to the insurance broker to educate the client on these certain coverages to protect their home and investment. A diligent insurance broker should provide a few different insurance carrier options to the homebuyer and then give their advice to the client for them to make an educated choice.”

Title Insurance Protects Your Home Too!

It’s critical to understand that when buying a home, perhaps the largest financial expenditure of a lifetime, the homebuyer wants to insure they are receiving good, clean and clear title and that no encumbrances exist that could jeopardize that fact!

Enter the title insurance policy being purchased at the closing table!

The process for choosing your title insurance provider (often selected by the buyers attorney) is somewhat different than the previously discussed homeowners insurance policy, but no less important!

While in New York State title insurance premiums will be the same regardless of the provider used, that can be where the similarities end.

Consider that homebuyers (and basically every other consumer) will typically research and comparison shop for most every product they buy ranging from vitamins to cars!

The question is then, why are most homebuyers willing to cede the selection of the title insurance provider, one of the most important insurance products they will every buy, to a third party?

Homebuyers in New York State should do research on title insurance providers, and always get a 2nd opinion on the costs presented on the title bill as they can vary widely (explained below).

Five Things To Be Aware Of When Buying Title Insurance

1. For Your Transaction, Compare Title Bills From More Than One Title Insurance Provider – When you receive a copy of the title bill for your real estate transaction in New York, the title insurance premium being charged will be the same regardless of the company you choose to use (Note: in a mortgage refinance, make sure you are being charged at the reissue rate if your transaction qualifies for it)!

Many of the other charges that appear on the title bill, however, known as ‘junk’ or ancillary fees, can and will vary from firm-to-firm. Sometimes this variance can be in the many hundreds of dollars.

This, in addition to the other points below, is why the consumer should take a somewhat active role in the choice of the title insurance provider that is selected.

And when you’re comparing the ancillary or ‘junk’ fees on various title bills, Hallmark Abstract Service is proud that we charge among the lowest in the industry, feeling we are well compensated through a percentage share of the title insurance premium. Because of the fees being charged, our clients can save as much as $1,000 when comparing our title bill to those of some other companies in the marketplace.

Remember, our recommendation regardless of who is providing the title insurance, is to get a title bill from at least one other company in the marketplace for comparison purposes.

2. Know Who The Title Insurance Underwriter Is! –When you buy insurance, regardless of the type, it’s critical that if a claim is put in that the underwriter will have the financial ability to pay! Remember that the claims-paying ability of companies are not created equal! This is certainly the case with title insurance underwriters. Hallmark Abstract Service primarily uses Fidelity National Title Group, the best capitalized title insurance underwriter in the business.

3. What Is The Title Claims Experience Of The Firm Chosen To Provide The Title Insurance Policy? – In the same way that all underwriters are not created equal, the firm actually doing the work to ensure a buyer will have good and clear title are not either! Don’t be afraid to ask questions as, once again, for most people this purchase will represent the largest one that they will make in their lives! Hallmark Abstract Service is proud that in our 10+ years in business we have not had a valid title claim!

4. Does The Title Company Chosen And/Or Anyone Involved In The Transaction Have An Affiliated Business Arrangement? – Perhaps an uncomfortable question to ask, but you as the the consumer have the right to know and the firms involved have the obligation to tell! An Affiliated Business Arrangement or AfBA, ‘is an arrangement to share or refer business between two different companies involved in providing services in the closing of a real estate transaction. There may be ownership interest of a party in both the business referring out the service and the business receiving the referral.The practice is not illegal, but is regulated by RESPA to assure full disclosure to the consumer of any relationships where business is referred in this way.’ (Source)

You want your title insurance provider to solely be focused on protecting you, their client, and not considering a business arrangement with a third party. Hallmark Abstract Service has no affiliated business arrangements.

5. You As The Consumer Have The Right To Choose The Title Insurance Provider – It’s entirely possible that you may not want to but, be aware, that if you do it is your right to choose!

Michael Haltman is CEO of Hallmark Abstract Service in New York, and can be reached at mhaltman@hallmarkabstractllc.com or (646) 741-6101.

Hallmark Abstract Service…You Buy, We Protect!

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Title Insurance: 5 Things Every New York State Homebuyer Or Refinancer Of A Mortgage, Should Know!

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