Thursday, July 26, 2007

query: do I really need title insurance rip off

Did you cough before you said rip off? That's how I heard it. ;)

Anyway, here's another way to look at it.

Do you really need homeowners/fire/hazard insurance?
Do you really need health insurance?
Do you really need auto insurance?
Do you really need life insurance?
Do you really need disability insurance?

It's really a matter of your personal taste or tolerance for risk. You may purchase title insurance and never need it, or you may skip it, suffer a loss and wish you had paid the one time premium.

Everybody seems to understand the need for fire insurance because we see fire on the evening news. It's a very easy to understand situation.

What about folks who go through a disaster that isn't covered by their homeowners insurance? That's harder to understand and makes the policy seem like a rip off.

Media coverage of title insurance doesn't help because it's hard for those outside of the business to understand why some situations are covered and some are not.

The new 2006 ALTA title policies are better. The language is easier for most people to understand, that is, if you take the time to read it or are even given a courtesy copy to review.

So, do you need the coverage? No, not unless you have a title problem, but do you want to take that chance? That's the real question. Real estate is often the largest investment a person has and why you would want to gamble with the validity of ownership if beyond me, but it is a personal choice and this is a free country.

Sorry, but I had to cough before I said free. Shoulda said almost or used to be.......damn commies....


John Povejsil said...

Diane - are the numbers from the Title Report accurate for PA (referring to the "intangibles tax")? If so, I don't know how people can do business there. Anyway, I understand people resenting paying for lender's policies, but owner's coverage is an unbelievably good deal. Such a good deal, in fact, that if I didn't have to offer it, I'm not sure I would - it's too cheap for what the buyer gets.

As for the TTR chart, one thing bugged me: why did it put the appraisal fee into the title fee section? While it was a welcome dose of reality on title fees (as opposed to Forbes and money), it did seem to me that an industry mag lumping that fee into title fees perhaps tipped its hand that it assumes VMCs are the norm.

Diane Cipa, The Closing Specialists® said...

Hi, John: Which article? It's not ringing a bell.

Diane Cipa, The Closing Specialists® said...

Thanks for e-mail. Yes, I did see the article. It's worth talking about in a post. I'll get one up today and yes, we suffer with exorbinant transfer taxes here in PA.