Understanding Title Insurance Underwriting in Tennessee

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By Rochford Law Posted on December 12, 2018 at 10:54 AM

Title insurance protects the buyer and lender from financial loss in the event of title defects. After the completion of a title search, buyers frequently purchase title insurance to protect them in the event a issue arises that threatens their ownership of the property. Unlike, other insurance policies, you pay for your title insurance once and usually during the closing process.

Unless you pay for your home out-of-pocket, your lender will usually require to you to purchase a loan policy of title insurance. The policy you are buying is important. It contains critical information about what is and isn't covered. The coverages in a title insurance policy are determined by an underwriter who not only decides upon the coverages in the policy but also decides whether or not you can qualify for the insurance. Underwriters are a critical component of title insurance, but most buyers are unaware of their role.

What is an Underwriter?

The word “underwriter” is defined as “a person or company that underwrites an insurance risk.” An underwriter's job is to review and analyze risk. When applying for insurance, the underwriter will review your application and either approve or deny your coverage based on a risk assessment. Some aspects that affect your chance for coverage are:

  • The type of policy you want

  • Previous insurance

  • Claims

  • Where you live

Underwriters advise on risk management and continually review and examine potential risks prior to agreeing to issue policies.

An underwriter is not the same as your insurance agent. Your insurance agent is a broker and is a middle person between you and the underwriter. When you approach an insurance agent with the intent of purchasing, for example, either auto or home insurance, the agent will take your application and send it to the underwriter. Once approved, you've got coverage. The same process applies to title insurance. When purchasing title insurance at the time of closing, you will work directly with a title insurance agent rather than the underwriter.

Your title insurance agent should be well informed and educated in the types of insurance being sold by that agent. For example, it is advisable that with respect to the purchase of real estate, you purchase title insurance from a reputable title insurance agent.  It is always preferable that you purchase your title insurance policy from a licensed attorney with specific expertise in real estate title. The attorney should be able to answer your questions. However, the ultimate decisionmaker regarding whether or not you can obtain a title insurance policy is the underwriter.

Why It's Important to Read Your Policy

Title insurance policies are not all that different from insurance policies insuring your home, auto, and health. All of these policies provide detailed and explicit information about what is and what isn't covered. Reading your policy in advance will help you to understand the gaps in coverage. One of the most important documents to examine is the title insurance commitment. It explains in detail the type of insurance coverage you will obtain upon issuance of your title insurance policy. The title insurance commitment also spells out any issues that could arise that would be excluded from your title insurance coverage.  For example, there is commonly an exclusion for any issue that would be revealed by a survey of the premises. Without a survey, for example your title insurance coverage will not protect you in the event you find yourself in the middle of a boundary line dispute with your neighbor.  The title insurance commitment also lists the names of the policyholders, coverage levels, and more.

It is always advisable to examine the title insurance commitment. It is a binding document that governs whether or not you are covered in the event of a loss. These pages are saturated with legal language to help protect you and the insurer from potential financial loss. Because title insurance commitments can be tricky to read, you might want to hire an experienced closing attorney who can help you understand the contents of the title insurance commitment and title insurance policy.

What is Recoupment

In the event of a title claim resulting in a payment on the title insurance policy, the title insurance company sometimes engages in a process called "recoupment." Simply stated, recoupment is the ability for the title insurer to recover financial losses from its title insurance agent following the payment of a claim. It's a topic we will cover more in depth later.  For purposes of this discussion, it will suffice to say that, under some circumstances, both the title insurance underwriter and the title insurance agent are liable for a loss arising from a title claim. Read your title insurance commitment and title insurance policy carefully with your trusted attorney before signing and you'll be better covered in the event of a problem.

Tennessee Title Insurance Underwriters

In the event you are required to make a claim on your title insurance policy, you will then deal directly with the underwriter of your title insurance. For example, assume that an undisclosed lien creates a title problem with the ownership of your property. Solving the problem starts with contacting your title insurance underwriter.

Going through the closing process in Tennessee affords you the opportunity to work with some of the largest title insurance underwriters in the country. Knowing who they are and the areas they service will help you make better, more informed decisions.

  • Fidelity National Title Insurance Company - a network of operations and agents, Fidelity and it's family companies (including Chicago Title Insurance Company) have a strong presence in East Tennessee and parts of Middle Tennessee.

  • First American Title Insurance Company - First American Title has a  particularly strong presence in Memphis and Middle Tennessee.

  • Old Republic Title Insurance - With a strong presence in Nashville and Middle Tennessee, Old Republic Title has offered title insurance to residents for decades protect their property.

Old Republic Title Insurance

Old Republic has had a strong presence in Middle Tennessee since the 1980s. It gained its first foothold in Middle Tennessee  by affiliating with Nashville real estate attorney John Cobb, grandfather of Rochford Law & Real Estate Title attorney John Cobb Rochford. Mr. Cobb had a sterling reputation in the Nashville community by offering sound real estate legal advice.

Choosing the Right Title Insurance Underwriter 

As a consumer, you have the right to select your underwriter for your title insurance, the same as you do with your auto and health insurance. Which title insurance company you choose is predicated by requirements such as pricing, ability to accommodate your requests, and personability. Working through these attributes is best completed with the help of a reputable real estate attorney.

If there are any issues with your title, you want the best underwriter to make the process as comfortable as possible. That's why we are here for at Rochford Law & Real Estate Title. We'll work to find the best title insurance policy and underwriter for you. Call 615.269.7676 for a free consultation today.

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Topics: Real Estate Title, Title, Underwriter, Title Insurance