Hi Diane, thought I would follow up to share the outcome of this title insurance claim for the costly non-permitted construction on our house...
Even though our legal matter with the sellers was far down the road (and stalled) and only then had we decided to file the claim, First American agreed to pay the full amount of the policy cap of 25K for such claims (hey, it's something!). So in this case, we're very lucky we decided to pay for the enhanced policy way back when we bought the home. I also think our intense record keeping on the matter provided the title company with the information they needed to evaluate the claim without any prolonged investigation or agony on anyone's part.
While we would have rather avoided this whole mess, at least we have found this bright spot in what we once, as first time home buyers, thought was just an obligatory part of the closing process. It was a nice feeling to realize that a signing a couple of pages and a small check resulted in this little policy that has been quietly protecting our interest all these years.
Very happy to hear that. Thanks for reporting back. ;)