How to Compare Title Insurance Providers: Important Information for the Real Estate Investor

In a June 18, 2008 World News and Report article, Kimberly Palmer wrote about the option those purchasing real estate have to not buy title insurance. Though real estate investors may cover the risk themselves, experts in the industry strongly recommend against such a move. With so much financial risk and burden already upon the shoulders of real estate investors, the cost of title insurance may provide some welcome relief. Director of Insurance for the Consumer Federation of America J. Robert Hunter gave testimony before members of congress on April 22, 2006. In his testimony he stated that, "In 2005, consumers paid almost $17 billion in premiums for title insurance countrywide. Title insurance remains one of the most costly items at the closing of a real estate transaction, yet consumers poorly understand it. Title insurance assures the lender and buyer that the person selling a property actually has a clear title to transfer to the buyer. Unlike other forms of insurance that protect against future unexpected events, title insurance is essentially a guarantee that the title agent or title insurance company has diligently reviewed the relevant title information and identified any problems with the title prior to the sale." Clearly, becoming educated about title insurance is an important part of any real estate purchase.

WHAT TO LOOK FOR

Check with your state's department of insurance for ratings, complaints, and other pertinent information regarding the title insurance companies you are considering. The National Association of Insurance Commissioners website has all of the links on its website.

The Better Business Bureau, online consumer complaint sites, and professionals who deal with various title insurance agencies are all great sources of additional information. Though some opinions may be biased for any number of reasons, getting information from a variety of sources will help create the most accurate overview. Sometimes those who work at the recorder's office or the register of deeds office will openly discuss which companies have the record for best or worst filings with their office.