What Happens If Title Insurance Company Goes Out Of Business?
When you are buying a home, one of the most important steps is to purchase title insurance to protect your interests in the property. Title insurance pays if someone other than you has a legal claim to the property, such as an unpaid mortgage or tax lien. It is important to understand what happens if the title insurance company goes out of business.
What is Title Insurance?
Title insurance is a type of insurance that protects your ownership rights in a property. The policy is typically purchased when you buy a home and covers you against any claims that could arise from title issues. These include prior liens, unpaid mortgages, or other defects in the title. The policy will also cover you in the event of fraud or forgery of documents related to the title. Title insurance is different from other types of insurance in that it is a one-time premium that covers you for as long as you own the property.
What Happens if Title Insurance Company Goes Out of Business?
The good news is that if the title insurance company goes out of business, your policy is still valid and in force. The title insurance company is required by law to pay out any valid claims even if they are no longer in business. The bad news is that the title insurance company may not be able to pay out all claims if there are not enough assets to cover them. In this case, the state insurance commission will step in and pay any valid claims up to the maximum amount of coverage that was purchased.
How to Protect Yourself?
When selecting a title insurance company, it is important to make sure it is financially sound. Make sure to do your due diligence and research the company to make sure they are reputable and have a good track record. It is also important to purchase an adequate amount of coverage to protect yourself. The minimum amount of coverage required by law is usually not sufficient to cover all potential claims. If you are buying a home in an area with higher risk, it may be wise to purchase additional coverage.
What to Do if You Have a Claim?
If you have a claim against your title insurance policy, it is important to act quickly. Contact the title insurance company right away and notify them of the claim. The company should then investigate the claim and make a determination as to whether or not it is valid. If it is found to be valid, the company should pay out the claim in full. If the title insurance company has gone out of business, contact the state insurance commission and notify them of your claim. They will then take over the claim and pay out any valid claims up to the maximum amount of coverage that was purchased.
Title insurance is an important part of the home buying process and provides protection against legal claims on the property. It is important to understand what happens if the title insurance company goes out of business. In most cases, the policy is still valid and in force, but the title insurance company may not be able to pay out all claims if there are not enough assets to cover them. To protect yourself, make sure to select a financially sound title insurance company and purchase an adequate amount of coverage. If you have a claim, contact the title insurance company right away and notify them of the claim.