Part of what my role is at Hillsborough Title besides owner, providing leadership and vision, and cleaning the occasional toilet is EDUCATING our clients. We sometimes take for granted the insight and knowledge we each have in our prospective industries.
My goal is to educate our clients so they may make more informed decisions.
My industry, the very sexy and entertaining world of title insurance has tons of moving parts to it, and so begins my lessons to the masses: I call it my TITLE 101 series.
Lesson 1- UNDERWRITERS
Hillsborough Title is an independent title AGENCY. We write title insurance on title insurance COMPANIES (since we so closely relate to Property & Casualty insurance, I’ll refer to them as CARRIERS). WE as an agency decide what CARRIERS we write our title insurance on. Just like you have homeowners insurance and auto insurance written on various carriers, so goes title insurance. All is well in the world of insurance, until you have a CLAIM. Then you find out exactly what kind of coverage you have, and find out the service levels, liability, legal ramifications, and strength of a carrier you have. Imagine a startup homeowners insurance company who just started writing earthquake insurance in Japan in 2010….unless they had a few billion dollars behind them to pay claims with, chances are they may not be in a very good financial position right now.
A similar thing is happening in our industry right now. The Real Estate industry has been ROCKED for several years now. This downturn in the economy, loss of jobs, Wall Street crash, Sub-Prime crisis, wars, you name it- have decimated anything and everything to do with Real Estate, transactions, sales, building, lending, etc. What we have seen is that ONLY THE STRONG SURVIVED. What once were pillars in our communities and real estate arenas are gone, bankrupt, dissolved, sold, or just shut down. Companies that were overleveraged and over-employed are gone. Real Estate companies, Mortgage Companies, Banks, Builders, Developers, Title Companies- everyone tied to the sale and resale of housing were affected.
Title underwriters too felt the brunt of this. Claims spiked, fraud everywhere, premiums decreased- so only the financially strong sound underwriters survived. The ones worthy of being in business, and able to pay their claims.
Now that we see an improving economy and real estate transactions are on the rise, so are the return of the startups, and yes- some fly-by-nights. We recently saw an underwriter go down that was financially insolvent and unable to pay its claims….so imagine you have paid your insurance premium on your car, get into an accident, and the insurance company says “sorry, we cant pay your claim”….wouldn’t you be just a little irate? You fulfilled your end of the bargain by paying your premiums….now they wont hold up their end?
My advice? Do your homework. As a lender, demand your policies to be written on companies able to pay their claims. Buyers- make sure the policy that you are getting will be good when you need it. Realtors and Sellers- you decided which title company to use and trusted in their choice of underwriters….be sure they are financially sound. Here is a good place to look http://www.demotech.com:8080/01_pages/fsr/companies.aspx?t=1 and here is a good rule of thumb….I like 9 zero’s on my companies 🙂