When a buyer purchases residential or commercial real estate in New York, or is refinancing an existing mortgage, they will be acquiring title insurance along with it*!
While title insurance will be protecting the owner against financial loss for what is likely their most valuable asset by ensuring that they have good and clear title to the property, most of these consumers will know little about who it is that is ultimately backing the policy.
In other words, who is the title insurance underwriter and what is its financial strength.
When consumers buy insurance of any kind they hope (and pray) that when the time comes for a claim to be paid, the company backing the policy is stable enough and has claims paying ability substantial enough to make good on it.
If the underwriter has limited policyholders surplus and a substantial and valid claim comes in, will the insurance company pay that claim in a timely way or will it put the policyholder through a painful and extended process?
For anyone who has gone through a homeowners policy claim after damage or perhaps a claim for the loss of valuable personal property, you know that payment can sometimes take time.
Questioning the details of the claim, contesting the claim or worse, litigating the claim with the hope of delaying and potentially denying responsibility for payment can sometimes be part of the insurance industry playbook.
That said, it therefore behooves the insurance-buying consumer to concentrate on companies that possess substantial claims paying ability to, at the very least, try and mitigate a great deal of the problem.
In title insurance, when dealing with an abstractor, it’s also important to work with a company that has a low experience of claims. After all, if there is no claim, then much of the above discussion becomes moot.
Some Examples Of Financial Strength
In the New York State title insurance arena the great majority of underwriters adhere to the premium structure established under the TIRSA Rate Manual, while a small number do not.
The companies that do not follow TIRSA will typically offer rates, often through online purchases, below TIRSA.
So does this mean that these lower-priced company alternatives provide similar service and protection to the consumer as those companies that follow TIRSA?
You make the call!
Below are three companies rated for financial strength by Demotech. Chicago Title Insurance Company is a member of the Fidelity National Title Group (member TIRSA) while the other two are online title insurance providers (non-TIRSA).
Pay particular attention to the financial strength indicators.
Title Insurance And What The Consumer Should Consider
- Who is your underwriter?
- What is the claims experience of your title insurance provider?
- Do you know whether the non-title insurance premium fees you are paying are fair and reasonable?
And remember, the purchaser of real estate or the refinancer of a mortgage has the RIGHT to choose the provider of their title insurance!
*Unless it’s an all-cash purchase in which case purchasing title insurance, while highly recommended, is optional.