$661.7 Million Paid in Title Claims in 2003
|September 29, 2004|
Washington, DC - The American Land Title Association (ALTA) has released the results of a recent industry study showing that title insurers paid approximately $661.7 million in claims in 2003, compared to $582.7 million the previous year. These payments were made to, or on behalf of, insured homeowners for losses they experienced under policies issued to them or their lender, or to defend those titles from the claims of others.
“For more than 125 years, title insurance companies have protected the interests of homebuyers through a process that has given Americans a sense of comfort and security in what is almost always their most significant investment – their homes,” said James R. Maher, executive vice president of ALTA. “The public misperception that title insurers do not pay substantial claims results from a lack of understanding of what title insurance is and how it protects homeowners. It is equally important to note that the title industry spends more than 10 times the amount it pays in claims to perform title searches and cure these title problems to avoid claims,” said Maher.
Unlike other forms of insurance, title insurance is based on actions that have already occurred, not on what may occur in the future. This is because property can be used for many different purposes over a long period of time and as a result be subjected to numerous claims. A title search of the public records is the starting point for a professional title search. This search will determine who owns the property and what interests already exist in that property.
Problems discovered in the title search are generally resolved before the homebuyer closes on the property. Often, court action or other steps must be taken to resolve the problem. Many times, buyers are never even aware of these problems because title professionals have resolved them without delaying the closing or bothering the buyer. Problems with title arise more frequently than is generally assumed. An ALTA survey of 420 abstracters and agent operations showed that title problems arise in one out of every four real estate transactions. Because of the research and corrective work that title agents perform, it is rare for homeowners to suffer a loss under their title insurance policy. According to Maher, title insurance plays an important role in the home buying process because it protects buyers and mortgage lenders from the potential financial losses that title problems can cause. “The truth is that claims do happen more frequently than people think,” said Maher. “Title insurance not only buys you protection from financial loss, it buys you peace of mind.”