Title insurance companies, unlike property or medical insurance companies work to eliminate risk before something happens. Title insurance premiums are paid to identify and eliminate potential claims and risk before they happen. Medical and homeowner insurance premiums are paid to insure against an unpredictable future event. Title insurance premium is paid once, during escrow while other types of insurance are paid at regular intervals and are renewed.
The goal of a title company is to conduct a thorough search and evaluation of public records to prevent any future claims. The experts are trained to identify the rights others may have to your property, such as recorded liens, legal actions, disputed interests, rights of way or other encumbrances on your title. They should have extensive experience in local Boundary Lines and Easement locations which will enable them to forecast potential obstacles in a transaction.
There are 2 different types of title companies. Direct Writers issue their own policy and have reserves set aside to back the policies of title insurance they issue. Title Agents operate like a direct writer, however they do not issue their own policy of title insurance but rather pay a fee to the direct writer for the right to issue a policy of title insurance.
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