Title Insurance: As a homebuyer, the term is probably familiar -- but is it understood? What is your dollar actually
paying for when you purchase a title policy?

Title Insurers, unlike property or casualty insurance companies, operate under the theory of risk elimination. Title
companies spend a high percentage of their operating income each year collecting, storing, maintaining and
analyzing official records for information that affects title to real property. Their technical experts are trained to
identify the rights others may have in your property, such as recorded liens, legal actions, disputed interests, rights
of way or other encumbrances on your title. Before closing your transaction, the title company will proceed to "clear"
those encumbrances which you do not wish to assume.

This theory is different from that of most other insurance where, for example, rates and anticipated losses are based
on actuarial studies and premiums are pooled on the assumption that a certain number of claims will be made. The
distinction is important: title insurance premiums are paid to identify and eliminate potential risks and claims before
they happen. Medical and casualty insurance premiums, for example, are paid to insure against an unpredictable
future event, knowing that risks exist and claims will occur. Furthermore, title insurance involves a one-time premium,
paid when you close the real estate transaction, while property, casualty and medical insurance require regular
renewal premiums.

The goal of title companies is to conduct such a thorough search and evaluation of public records that no claims will
ever arise. Of course, this is impossible -- we live in an imperfect world, where human error and changing legal
interpretations make 100 percent risk elimination impossible. When claims arise, professional claims personnel are
assigned to handle them according to the terms of the title insurance policy.

As in all competitive business environments, rates vary from company to company, so you should make comparisons
before deciding on a particular title company. Your real estate professional can help you do this. In addition, there
are many helpful customer services provided by title companies which you and your real estate professional may
find helpful to your transaction.

The issuance of a title insurance policy is highly labor-intensive. It is based upon the maintenance of a title "plant,"
or library of title records, in many cases dating back over a hundred years. Each day, recorded documents affecting
real property and property owners are posted to these title plants so that when a title search on a particular parcel is
requested, the information is already organized for rapid and accurate retrieval. This investment in skilled personnel
and advanced data processing represents a major part of the title insurance premium dollar.

Are you ready for the AgorillaREALTOR experience? Remember: "It's a jungle out there; why monkey around when
you can hire Agorilla"  Let's get started!

Reference: Article by CLTA. Retrieved from iHouse, 10/24/08. Written in whole.
Title Insurance - Where Does Your Dollars Go - Title & Escrow
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