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Before you purchased your home, it may have gone through several ownership changes. There could be a lien or title claim that was overlooked at any point in the chain of ownership that could eventually cause a problem. For example, someone along the way may have forged a signature in transferring title or there may be unpaid real estate taxes or other liens. Title insurance provides coverage for losses when a land title is not free and clear of defects unknown when the title insurance is written. Title insurance protects the insured party from any claims and legal fees that arise out of such problems. In order to better understand the function of title insurance, some common questions are answered below.
Am I obligated to purchase title insurance?
If there will be a mortgage on the property you are purchasing, mortgage lenders require you to purchase title insurance in the amount equal to the loan. The coverage provided by the title insurance will last until the loan is repaid. As with mortgage insurance, it protects the lender but the borrower pays the premium, which is a single-payment made upfront.
Does title insurance protect me?
An owner’s title policy covers the full value of the home and protects you. However, lender policies protect the lender up to the amount of the mortgage.
Does a lender’s policy provide protection for me?
A lender policy only covers the lender’s loss. Although a title search is a routine part of a property transaction, it is possible that a lien or a claim on the property may be overlooked; no search is 100% dependable. Owner policies are indemnity policies which protect against loss to the insured and provide protection to you.
When does title insurance protection begin and end?
Title insurance protects against losses from claims that arose prior to the date of the policy. Coverage ends on the day the policy is issued and extends backward in time for an indefinite period. This is different from property or life insurance, which protects against losses resulting from events that occur after a policy is issued for a specified time.
How long is a property owner covered by title insurance?
The owner’s protection lasts as long as the owner or any heirs have an interest in or an obligation to the property. When they sell, however, the lender requires the purchaser to obtain a new policy. That protects the lender against any liens or other claims against the property that may have arisen since the date of the previous policy.
For example, if the contractor you failed to pay for remodeling your kitchen places a lien on your home, you are not protected by your title policy because the lien was placed after the date of the policy. You will probably be required to get the lien removed before you can sell the property. In the event the lien isn’t removed and a search fails to uncover it, the new lender will be protected by a new policy.
Does title insurance protect me from false claims that arise after I purchase the property?
The standard policy does not. Many events beyond your control can reduce the value of your house after you buy it. If it is a newly-constructed house, sub-contractors claiming they had not been paid by the builder may place a lien on the house. Identity theft can result in a new mortgage you know nothing about. A neighbor could build on your land without your knowledge, thereby adversely possessing and eventually taking your land. You may even be told that you must correct a zoning violation of the previous owner.
There is a policy with expanded coverage for these situations. It is referred to as the American Land Title Association (ALTA) homeowners policy.
Do I need to purchase a new policy when I refinance?
You don’t need a new owner’s policy, but the lender will require you to purchase a new lender policy even if you refinance with the same lender. Furthermore, the lender is concerned about title issues that may have arisen since you purchased the property. A new title search will uncover any current liens, and you will have to pay any uncovered liens off as a condition of the refinance.
Insurers generally offer discounts on policies taken out within short periods after the preceding policy. In some cases, discounts are available as much as 6 years from the date of the previous policy.
Does title insurance guarantee that I will be able to sell my property if an unforeseen claim arises?
Title insurance does not prevent loss of marketability due to a title claim any more than fire insurance prevents fire. If a claim arises, you probably won’t be able to sell your property until the claim is settled by the title insurer.
Does a borrower have the right to purchase title insurance on his own?
Yes, borrowers have the right, although few exercise it. Most leave it up to a professional such as, a real estate agent, lender or attorney, to select the carrier. This means that competition among title insurers is largely influenced by these professionals who can direct business.
For more information on title insurance, you can contact the Louisiana Land Title Association (LLTA) at (225) 291-2806 or visit their website at www.llta.org.
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Umbrella Insurance
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Insurance policies have specific limits for liability coverage. Liability coverage is the basic coverage for injuries or damage to other people or property if you are at fault for a loss. If an unfortunate incident should happen that may be your fault, do you have enough liability insurance from your current insurance policies to cover your negligence? Most families cannot afford the cost of an unexpected financial burden such as a lawsuit. If you are taken to court, the judge or jury may award the injured person a substantial amount of money for which you may not be covered. An umbrella insurance policy may help in this type of situation. “Umbrella” is the term for a liability policy that covers above and beyond certain primary policies and can provide excess insurance protection. Once looked at as being only for wealthy people, umbrella insurance is relatively affordable coverage and a protection available for every policyholder.
Umbrella insurance is designed to give added protection above the limits on automobile, homeowners and watercraft insurance policies. It provides extra liability coverage that protects you in the event of an unforeseen situation where you could be held legally liable. Once the primary insurance policy’s limits are exhausted, the personal umbrella insurance policy is triggered.
Umbrella policies can also provide coverage for many situations that are not covered by a primary liability policy. It can provide a canopy of protection against catastrophic financial events such as:
- A dog bite that seriously injures someone and you are liable for the extensive medical expenses;
- A neighbor that falls in your yard and successfully sues you for a large settlement, and your homeowners insurance liability limit is capped at $500,000;
- A teenager who is at fault in a major car accident harming several people and causing damage well in excess of your $500,000 automobile liability insurance coverage limits.
Typically the policies for umbrella insurance have coverage limits of $1 million to $10 million dollars. One way to determine the amount of coverage needed is to calculate the total of all of your assets. It is also important to have umbrella insurance if you own a small business or have a high risk of personal injury suits.
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EDITOR’S LETTER
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Celebrating and honoring our own
With a cheerful heart, I am proud to celebrate the graduation of five of our family’s brightest members, and with another beat I am even prouder to honor the bravery and life of two of our finest employees.
Graduates
Lashon Crawford
Associate Degree – Business Administration
University of Phoenix, Louisiana Campus, Baton Rouge, LA
Ashley Hebert, President’s Medal Recipient
Bachelor of Science – Human Medicine
Our Lady of the Lake College, Baton Rouge, LA
Brittany Raby, Honors Graduate
Bachelor of Science – Speech – Language Pathology and Audiology
Southern University and A & M College, Baton Rouge, LA
Daria Crockett
McKinley High School, Baton Rouge, LA
Raven Gooden
McKinley High School, Baton Rouge, LA
Fallen Heroes – LDI Fraud Section investigators killed in the line of duty, June 7, 2011
Rhett Jeannsonne
Six year employee
Kimberly Sledge
Eleven year employee
Share with me in recognizing the dedicated work and accomplishments of them all.
Deputy Commissioner
Clarissa A. Preston, CIC, APIR
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