There is a lot of misconception as to what a title insurer’s liability is to an insured.  A title insurer’s liability is limited to the policy. When an attorney submits a claim, the policy jacket should be reviewed to understand the provisions that govern the title insurer’s liability to the insured claimant. Condition 15 of ATG’s Owner’s Title Insurance Policy (“policy”) provides in part as follows:          

1. This policy together with all endorsements, if any, attached to it by ATG is the entire policy and contract between the insured and ATG. In interpreting any provision of this policy, this policy shall be construed as a whole.
2. Any claim of loss or damage that arises out of the status of the Title or by an action asserting such claim shall be restricted to this policy.

 . . .

The main provision of the policy that discusses the extent of the title insurer’s liability is Condition 9 of ATG’s policy, which provides, in part: 

This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the Insured Claimant who has suffered loss or damage by reason of matters insured against by this policy.

1. The extent of liability of ATG for loss or damage under this policy shall not exceed the lessor of 

i.    the Amount of Insurance; or

ii.    the difference between the value of the Title as insured and the value of the Title subject to the risk insured against by this policy.

. . . 

Insured claimants and their counsel are frequently surprised to learn that the amount of the title insurer’s loss is limited to the diminution in value between the value of the title with the defect and the value of the title without the defect. 

There are other conditions of the policy that address the amount of title insurer’s liability, but the above two are frequently surprising to insured claimants. If you have any questions regarding title insurance claims, contact Christine Sparks, csparks@atgf.com, 312.752.1408.