Initially the purchaser of title insurance ought to be familiar with exceptions within the insurance policy that will not attract indemnity in the event of their occurrence.

In later years title insurance policies have indeed extended their ambit to cover the insured more fully, and this coverage generally extends to the actual use and enjoyment of the land. Such a broad cover is to the advantage of the policy holder, in the knowledge that any intended uses of the property will be safeguarded against.

However, the date of the policy is obviously of some import. Traditionally title insurance covered defects in title that arose prior to the policy date, but now are more often to include coverage for risks arising after the policy date if particularly endorsed in the policy.

Clearly this may affect the premium of the policy but is to be noted and addressed in order to avoid unexpected surprises such as interests that were created in a property simultaneously with a fraudulent disposal of land. In this instance the fraud may well be rectified but the interest created will be recognized and the owner of the property will find it difficult to redress this issue unless they are insured against this contingency.

For this to occur, specific terms in regard to coverage of losses incurred after settlement and the policy date need to be incorporated into the policy.

Maximum Indemnity

Often a ceiling indemnity is specified within the policy, and policy holders are warned to analyze the effectiveness of this amount. Commonly 200% of the purchase price is applied however, as is evident some risks may materialize into losses that are in excess of this amount.

Clearly a certain amount of practical evaluation is need to be the policy holder, but this can b no more than a judicious presumption, and so care must be taken to attempt the foreseeability of harm.

Another matter of relevance is that of the settlement received in an insurance claim for title defects. Often the insurer will attempt to clear the defects that have made their presence felt, and restore the policy holder to a quality title, however on occasion, if the defect is unable to be cleared, the insurer may only be able to indemnify the policy older with compensation.

Compensation if often a suitable and a remedy that is readily accepted by most, but in some cases can fail to address the real loss suffered by the claimant.

In cases of personal vulnerability and emotional harm, the claimant will find that sorrow doesn’t sound in compensation particularly when the law is involved, and so one may be left feeling undercompensated after suffering a loss connected with a family home or where for instance memories and attachments are held.

Unfortunately this is one feature of title insurance that is unavoidable considering the commercial realities of insurers, courts and modern society in general.

Lastly, the purchaser of title insurance is obligated to inform the insurer of any matter materially affecting the subject matter of the policy. Failure to disclose information in the knowledge of the policy holder may render the policy invalid and subsequently fail to relieve the policy holder of any threat to title.

Resources:

http://jobfunctions.bnet.com/abstract.aspx?docid=176115

http://ezinearticles.com/?Title-Insurance---Examples-of-Problems-and-Advice&id=66020

http://www.thinkglink.com/Title_Company_Problems.htm