WHAT DOES TITLE INSURANCE PROTECT? 

What Protections are Included in/ Excluded from Title Insurance Policies?

A title insurance policy is a one-owner item; its coverage extends only to the insured party listed on the policy (the owner and the mortgage company) and to those who succeed to the interest of the insured by operation of law (e.g. personal representatives, fiduciaries and heirs).

It protects you against loss due to title defects, liens, or other similar matters. Title insurance protects you from claims of ownership by other parties and against losses from problems that arose before you bought the property.

The title company will defend you in court if there is a claim against your property and will pay for covered losses.

A title insurance policy is NOT assignable to another purchaser. You should note, however, that policy coverage is perpetual as to the insured. So, if, ten years after you sell your property, it is found that you breached your contract with your Buyer because you conveyed defective title to the property (e.g. there was a forged deed in your chain of title), your insurer will be obligated to defend/ reimburse you as necessary – assuming, of course, that your policy provides sufficient coverage for the defect.

Here are a few examples:

  • Improper execution of documents

  • Mistakes in recording or indexing legal documents

  • Forgeries and fraud

  • Undisclosed or missing heirs

  • Unpaid taxes and assessments

  • Unpaid judgments and liens

  • Unreleased mortgages

  • Mental incompetence of grantors on the deed

  • Impersonation of the true owners of the land by fraudulent persons

  • Refusal of a potential purchaser to accept title based on the condition of the title

 

How will a Title Insurance Policy protect you?

A standard title insurance policy is likely to protect against common risks that can threaten your use and enjoyment of real property. Be very careful to review the terms of your policy to ensure that you are adequately protected. But generally, your owner’s title insurance policy will require your insurer to defend your title in court and pay for actual loss up to the policy maximum under the following circumstances:

  • A lien is filed against your title because a previous owner failed to pay a mortgage, taxes, judgment, special assessment or homeowners/ condominium association fee;

  • There are leases, contracts or options on your land that weren’t recorded in the public records or disclosed to you;

  • You lack a right of access to and from your property;

  • A deed in your chain of title is invalid because somewhere along the way, a notary public or other official improperly signed, recorded or delivered a deed; and

  • A deed or other document in your chain of title is invalid as a result of forgery, fraud against the rightful owner, a signature given under force or a signature given by a person legally incompetent to sign or claiming to be someone else.

 

What protections are NOT included in a standard title insurance policy?

Absent endorsements to the contrary, a standard title insurance policy will NOT protect you against title defects – unrecorded or recorded, and regardless of when sustained – about which you knew or which you allowed to occur. Also, it will NOT cover problems with your title that occur after the date on which you purchase the policy. Further, your title insurance policy will NOT protect you from UNRECORDED claims against the title to your property. Your insurer is also NOT likely to protect you against loss or damage suffered by reason of:

  • Violations of building and zoning ordinances and other laws and regulations related to land use, land improvements, land division and environmental protections;

  • Any restrictive covenants that limit how you may use your property and/ or state how buildings are to be constructed on it; these are contained in the policy itself;

  • Losses resulting from rights claimed by renters or others occupying the land;

  • Condemned land, unless a condemnation notice appeared in the public record on the policy date, or the condemnation occurred before the policy date;

  • Your spouse’s homestead, community property or survivorship rights to the property;

  • Whatever title irregularities arise from a deceased person’s estate, a bankruptcy estate or a trust;

  • Claims of others who may have certain rights if your property is near a body of water, or if it has a river or stream flowing through it (there is an endorsement related to this issue); or

  • Taxes for the year of the effective date of the policy, as well as subsequent taxes and assessments by taxing authorities for prior years due to change in land usage or ownership (i.e. where tax exemptions claimed by previous owners result in more taxes being assessed against your property in the future).

 

Which Laws/ Rules Govern Title Insurance in Florida?

In Florida, the title insurance industry is regulated largely under Title XXXVII of the Florida Statutes. Chapters 624 and 626 defines title insurance and provides general requirements for the authorization of title insurance underwriters/ agents and administrative oversight of the industry, which responsibility falls to the “Office of Insurance Regulation”. Chapter 627 contemplates the minimum rate a title insurance company must charge and the minimum protection it must offer when issuing a title insurance policy; among other things, it prohibits an insurer from writing certain exceptions/ exclusions to coverage into any given policy.

In the Florida Administrative Code, the Office of Insurance Regulation sets specific guidelines for the various steps in the process of issuing a title insurance policy. For example, Chapter 690-186 discloses the standard according to which your title insurance premium is to be calculated.

 

How much does Title Insurance Cost in Florida?

The cost of title insurance in Miami-Dade, Broward County and other South Florida counties varies based on the purchase price of the property. Unlike other insurance premiums, which must be paid annually, a title insurance premium is paid one time only at settlement. Florida’s title insurance premium is based on a promulgated rate calculation, which is determined by the state of Florida.

Florida’s title insurance premium is also determined based on the purchase price as follows:

  • Purchase Prices up to $100,000: $5.75 per thousand

  • Purchase Prices Over $100,000: $5.00 per thousand

So, for example, a property worth $100,000 would have a title insurance fee of $575, while a $200,000 piece of property would have a $1,075 title insurance cost.