Is it possible to shop around for title insurance when buying a house?
To get detailed information on title insurance we asked attorney Fran Pennarola for his expert information on the topic. Here’s what he had to say:
Title insurance varies from state to state. In Connecticut, for example, most closing lawyers act as agents for one or more title insurance companies. The rates between insurance companies are generally the same (what the state allows). Knowing that a lawyer who will be proving title insurance will get a commission on the sale of it gives the consumer the ability to shop among lawyers for the best possible fees. Some will be willing to negotiate on fees because of the title premium. Certainly in very large transactions, title insurance rates can be negotiated, as the title companies are looking for the business. I suspect that as time goes on there will be more ability to negotiate rates.
There are two kinds of title insurance—policies that only protect lenders and policies that protect both lenders and owners. Lenders require title insurance so that they have a deep pocket to go after in the event of a title defect in the property that jeopardizes their collateral in the property. It insures against an undiscovered easement or claim of ownership of part of the property through adverse possession. It can provide protection against developing estate tax liens. As mortgages move from the local market to a commodity, title insurance provides the financial markets insurance against unknown risks. An investor can evaluate a credit risk, but usually not a risk of a title problem. An Owner’s Policy protects the owner from similar kinds of claims. Title insurance, like all insurance, is designed to spread risks. An owner may be able to save a few dollars on the cost by only getting a lender’s policy, but that is not something we recommend.