Popular assumption: There are only three reasons a man drives an expensive car. (1) Small tallywhacker, (2) Big Ego, or (3) Midlife crisis. But popular assumptions aren’t true all the time.
I buy the nicest certified preowned cars I can afford, not because I have an oversize ego or under sized something else. I buy nice cars because I don’t want car problems. Period. I want the car to start, go, never need maintenance, and never fail me. I don’t want to wait for tow trucks. I don’t want to haggle with mechanics while they experiment on my car. I don’t want these things because I value my time. Time I spend worrying about my car is time I’m not able to work or be with my family. Simple.
Lets Talk Title Insurance and Cars for a moment.
When you buy a house, or refinance the house you own, you’re going to need Title Insurance. The lender will require it. So here’s the question. Do you want good Title Insurance or cheap Title Insurance? The answer is, you probably haven’t thought about it.
In California it’s customary for Listing Agents to pick your Title Insurance. In the case of a refi it’s your lender who decides. You pay for it. They pick it. Do they know what you’d pick – if you were to pick? (By the way, you can pick your Title Insurance but most people don’t.)
For my fancy preowned cars I buy insurance from a large reputable insurance company. I do this because I’ve had experience with cheaper companies. I’ve spent hours on hold, trying to get a call back, filling out forms, waiting for appraisals, and finding out things I thought were covered really weren’t. Since I value my time I’d rather pay a little more for my car insurance knowing that if something happens, it’s handled. No fuss. No mess. No hassle. No broken down guy.
How does my Real Estate Agent or Lender Choose My Title Insurance?
Ask them. I have. And here are some of the answers I’ve heard:
My office requires me to use our own in-house company (This is very common)
The Rep is really cute (I swear I’ve heard this)
The Rep is a friend of mine from High School
They are cheaper
(From a lender) When we do those no cost refi’s I have to use the cheap guys otherwise I have to pay the cost and I’m not doing that!
All Title Companies are the same. No, they aren’t. While most Title Companies offer the same type of coverage, sorta like Car Insurance companies, Title Insurance companies aren’t the same and neither are car insurance companies.
Let’s go back to premium cars. I pay extra for a premium car because I value my time and I don’t want to be the broken down guy. Same for Car Insurance. I go with reputable companies because I hate getting the runaround, sitting on hold, finding out what I thought was covered really isn’t and never getting callbacks.
Title Insurance companies are just like every other business. Some companies are in business for years, others come and go. Chicago Title, for example, has been in business for almost 200 years! Many others like United Title, Investors, Micro General, Pacific Title, American Title and National Title were flashes in the pan.
Quick- why do so many Title Companies go under?
Well, it’s easy math. If they are trying to gather market share with pricing and don’t charge enough for their product, they won’t have enough in reserve to pay claims.
What happens if my Title Insurance company goes down?
In most cases a larger Title company will buy the underwriting like in the case of Lawyers Title. When Lawyers went BK, FNF, (Fidelity National Financial) the parent company that owns Chicago Title, bought the underwriting from Lawyers Title for pennies on the dollar.
So what’s the problem?
Your time and stress level. If your Title company fails you will most likely still be insured. But good luck finding someone to help you with the claim! Your first call will go to, “I’m sorry, you’ve reached a number that is no longer in service.”
Title companies never pay claims. Oh really? Last year Chicago Title paid $500MM in claims. That’s a half a billion dollars!
Just the other day a lender at a large bank told me he’s only had one claim in eight years, so he’s using the cheaper on-line Title Company for his customers. Does he really know that to be true? Some homeowners will I guess call their Lender if a Title dispute pops up. But I think more people would contact their insurance company instead. In the case of my friend the Lender his customers may be suffering with claims he’s unaware of.
The full circle.
People who buy premium cars don’t often skimp on their cars or their car insurance. Your house is your largest expenditure. Bigger than a car. If you can afford the house do you really want go cheap on the Insurance that insures you as the rightful owner? Is your Realtor or Lender really doing you a favor by making you the broken down guy?
At the end of the day you might save a few hundred dollars on a cheaper Title Insurance policy. But I’m willing to bet if you ever have a claim you’d trade that two hundred bucks in a heart beat for a reputable Title Insurance Company who will be there to defend you.
Please feel free to leave comments. Thank you.
Note: Besides being a CFII, MEI, Pilot, I’m a Title Rep. In other words, I sell Title Insurance. Comments made here are my own and do not necessarily belong to my employer; Chicago Title & Escrow.
Chicago Title has been in business for more than 160 years. It’s a company you can trust.