Saturday, January 28, 2012

insuring the full value of proposed construction

I always enjoy working with a consumer who is savvy, reads the stuff we send to them and asks lots of questions.  This week I had the pleasure of working with an attorney whose title insurance order for a new construction transaction is being processed by our office.

She carefully reviewed the title insurance commitment. She requested copies of the documents underlying the exceptions.  She considered enhanced coverage and decided against it.  She asked for amendments to some boilerplate exceptions and one specific exception and accepted our explanation of the coverage and its limitations.  We offered extra coverage at a price but she declined.

She wondered why we were only proposing to insure the lot value and not the entire construction package.  I explained that the owner coverage could only be issued for the value of the property as it exists at issuance and that there was a procedure for obtaining full coverage after construction and offered to look into that for her.  Surprisingly, though we do a fair amount of new construction title insurance, this is the first consumer who raised that issue.

I contacted our agency rep and asked for guidance.  We are fortunate to have an agency rep who is an attorney and who also is a regular teacher in our regional continuing education classes.  She, like JC and me, had heard for years in these various classes that full coverage was available but only after construction.

We were all pleasantly surprised when the answer was that we COULD issue an owner policy NOW for the full amount.  That made our consumer happy and also made us happy since we could base the premium on the higher coverage.

I thought about the logic and it makes sense to me that there isn't really any extra risk because claim processing, if any occurred, would ferret out the question of actual loss.

I'm posting this because I think it's a good example of how the industry is constantly evolving and this is one regional change I welcome.

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