In as early as 1868, in the case of Watson v Muirhead, the Supreme Court of Pennsylvania found that a conveyance was not liable for negligence when exercising due care in his profession. The plaintiff in that case lost his land entirely and it was indeed this case that sparked the creation of title insurance within the United States.

Fraud in particular is one of the main objections to which title insurance is directed, and in the United States as well as internationally, real estate fraud in particular is increasing dramatically.
Manifesting itself in many ways, the theft of an individual’s identity to secure a conveyance or to obtain a mortgage is always possible. Spousal identity to complete a transaction and even the theft of a legal representative’s identity has not been unknown.

It can result in an owner losing their property or a lender losing the entire security for their loan, and so the incidence of title insurance is more than justified.

Often statutory schemes of title registration serve to protect purchasers for value in good faith, but in the United States the majority of title registration is achieved through the registration of deeds and so the risk to the bona fide purchaser in this respect remains high.

While the legal rules pertaining to the resolution of fraud and identity theft involving title to property are complicated, the law often rewards the insurer or entity that acts in the most timely manner in order to protect its interests.

Fraud in Real Estate Transfers

Title insurers often specifically allocate funds to address the resolution and indemnity for identity theft within their title insurance policies, and while the personal information of individuals appears to be at risk to theft at an increasing rate due to technological advancement, the result of identity theft can be psychologically and materially draining.

Indeed the risk to the insurer may be great as all contingencies to do with the challenge to title are to be indemnified, and this necessarily involves indemnity for such remote losses incurred as loss of wages for time taken absent from employment to redress the issue.

Clearly the security of title insurance is of an increasingly great benefit to owners of property and it is no more clearly amplified than in regard to the issue of identity theft and fraud upon a title to property.

Of course, the astute purchaser of title insurance will verify closely all the terms of a policy and ensure that the most heinous of risks such as fraud and identity theft are well catered for within.
Extended coverage to provide security against these sorts of contingencies that may occur after ownership has been transferred is readily available, and well advised to avail oneself of.

Of course, identity theft insurance is made available by a multitude of insurers as an entirely separate product, however economies of scale and efficiency are derived from the incorporation of the appropriate terms into a title insurance policy or the acquisition of extended coverage to be specifically included.

Resources:

http://www.firsttitle.com.au/PDFS/FRAUD%20SEMINAR%20-%209%20May%20200511.pdf

http://www.firstcanadiantitle.com/en/about/news_releases/ID%20Theft%20launch%20Release.pdf

https://secure.krek.ca/pdf/IDTheftOnlineOrderForm.pdf