How to File a Title Insurance Claim

A title insurance claim is an insurance claim that asks the title insurance company to compensate you for the losses resulting from a defect in the title of your property and from invalid or unenforceable mortgage liens against it. Titles are documents that signify that you have a right to own your property. Titles are legally complicated, and any problems with them can lead to prolonged, costly lawsuits. The title insurance helps to ease the resulting financial burden. Yet in order to take advantage of title insurance, you will need to know how to properly file a title insurance claim.

Understanding Title Insurance

A certificate of title, or more informally, a title, is a document used to establish who owns the property. It also describes the condition of the property at the time the current title holder acquired it and what mortgage is currently in force. It may also include information about any loans that use the property as collateral and any mortgage liens held against it.

When you buy property, the title is transferred to you. The information is updated to reflect your ownership. However, if the previous owner obtained the title illegitimately or if the owner did not have the authority to transfer the title to you, you will be vulnerable to lawsuits from the people who do have legitimate claim to the title. You may also face lawsuits if the title did not comply with any state and local laws. If the previous owner used the property as collateral for a loan and the loan was not paid off by the time you bought the property, you would be legally obligated to pay it off. If there are any liens held against the property, you would have to pay them off.

If you don't have title insurance, you would have to handle those issues on your own. When you buy title insurance, the title company handles them on your behalf. It will pay off the debts and try to settle any legal conflicts to the best of its ability.

The title insurance remains in effect for as long as you own your property and make your title insurance payments on time.

Filing a Title Insurance Claim

If any of the above-mentioned issues arise and you want the title company to help you, you will need to file a title insurance claim. First, you will need to fill out the title insurance claim form. You can obtain the claim form from your title company. Typically, your company would be willing to assign a representative to help you complete the form.

Once the claim is filed, the title company will work to address the issue as quickly as possible. In most cases, a title company is able to do so. However, there may be times when a company cannot resolve the situation quickly enough or when it may not be able to resolve the situation in your favor. In that case, you would be responsible for paying damages. In that situation, title insurance would cover all or a portion of the cost of the damages. If the worst-case scenario were to occur, if your title were declared invalid, you would have to give up your property. If that happened, the title insurance would cover all or a portion of the relocation costs and could cover some of the other losses.

It should be noted that many title companies will have caps on how much coverage the title insurance can provide. If the value of the damages exceeds the caps, you will be responsible for covering the difference.

blog comments powered by Disqus