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Wednesday, July 19, 2006
You’re paying too much for title insurance, studies say
And you thought Florida’s homeowners insurance market was bad. Turns out we’re paying a premium — perhaps twice as much as we should be — for title insurance, too.
That’s according to three new studies commissioned by Sunshine State insurance regulators. (Before clicking, keep in mind that this 131-page study contains more than you’ll ever want to know about title insurance.)
Title insurance is that arcane coverage that protects your lender but that you have to pay for. The price is part of the brain-numbing ream of documents you sign at closing.
The studies say the state’s average title insurance premium is $2,000. In one study, actuary Stephen Alexander writes that Floridians pay twice as much as buyers in Georgia, Alabama, Mississippi and the Carolinas for similar levels of coverage. And in another, Florida State real estate prof Stacy Sirmans says six companies control 99 percent of the state’s title insurance market.
“Since the consumer has little knowledge of title insurance, title insurance companies and agents direct their energy towards the recommenders (home builders, lenders, brokers, etc.) and ignore the consumer,” Sirmans writes. “This creates an incentive to give kickbacks, referral fees, and other types of payments to recommenders to secure their business. This could have the effect of driving up the cost to the consumer.”
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