April 2010 Vol. 3, No. 3
 

Underwriters' Bulletin

Claims Corner

Submitting a Claim on Behalf of an Insured

What should you do when a client comes into your office with a problem with the title to the real estate? One of the first considerations should be to determine whether the problem falls within the coverage of the title policy that was issued to your client. If it seems that the issue may fall within the coverage of the title policy, promptly notify the title insurance company that issued the policy. To preserve the rights of your client, take care to comply with the conditions of the policy. Always check the policy jacket for how and when to make a claim. This article will review two key provisions of the jacket for the Owner&€™s Policy of Title Insurance issued by ATG, which govern how claims are to be submitted to ATG.

The first question is whether the client (Insured) should notify the title company of a claim. Condition Number 3 of ATG&€™s Owner&€™s Policy of Title Insurance (policy) provides as follows:

 

 

3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT

The Insured shall notify ATG promptly in writing (i) in case of any litigation as set forth in Section 5(a) of these Conditions, (ii) in case Knowledge shall come to an Insured hereunder of any claim of title or interest that is adverse to the Title, as insured, and that might cause loss or damage for which ATG may be liable by virtue of this policy, or (iii) if the Title, as insured, is rejected as Unmarketable Title. If ATG is prejudiced by the failure of the Insured Claimant to provide prompt notice, ATG&€™s liability to the Insured Claimant under the policy shall be reduced to the extent of the prejudice.
 

 

 

The policy provides that ATG be notified of any litigation wherein a third party has asserted a claim that that is adverse to the Insured and that claim falls within the coverage of the policy. The policy also provides that ATG be notified of any claims that are adverse to the title or anytime that the title is rejected as unmarketable. It is important to note that the liability of the title insurance company is reduced to the extent the company is harmed by the Insured&€™s failure to promptly notify of a claim.

The next question that often arises is where the notice of claim should be sent. Condition 18 of the ATG policy provides as follows:
 

18. NOTICES, WHERE SENT

Any notice of claim and any other notice or statement in writing required to be given to ATG under this policy must be given to ATG at P.O. Box 9136, Champaign, Illinois 61826-9136.
 

It is common for title companies to be contacted by an Insured or counsel for the Insured with a question as to how the title claim should be made. Frequently, a representative from the claims department will provide information on how the claim can be submitted. Regardless of what you are told by the representative, you should always follow up with a written claim sent to the address provided on the policy jacket to ensure compliance with the terms of the policy.

Another good reason to notify the title company of a claim as soon as you are made aware of it is that attorney&€™s fees you charge your client are probably not covered under the policy. If there is coverage under the policy, it is usually preferable to have the title company involved as soon as possible so that your client does not incur unnecessary expenses. Condition 5(a) of the policy that is issued by ATG provides as follows:
 

5. DEFENSE AND PROSECUTION OF ACTIONS

(a) Upon written request by the Insured, and subject to the options contained in Section 7 of these Conditions, ATG, at its own cost and without unreasonable delay, shall provide for the defense of an Insured in litigation in which any third party asserts a claim covered by this policy adverse to the Insured. This obligation is limited to only those stated causes of action alleging matters insured against by this policy. ATG shall have the right to select counsel of its choice (subject to the right of the Insured to object for reasonable cause) to represent the insured as to those stated causes of action. It shall not be liable for and will not pay the fees of any other counsel. ATG will not pay any fees, costs, or expenses incurred by the Insured in the defense of those causes of action that alleged matters not insured against by this policy.
 

The policy provides detailed information on how to submit a title claim and what matters are covered under the terms and conditions of the policy. In order to protect the interests of the Insured, it is always best to follow the conditions of the policy to ensure that the Insured does not jeopardize any of the coverage of the policy.

If you have any questions about submitting a title insurance claim, contact Christine Sparks,csparks@atgf.com, 312.752.1408.

© ATG|Casenotes/Bulletin 1003_v3n3

[Last update: 4-23-10]

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