The housing downturn brought many lawsuits against everyone involved in the housing market and title agencies were no exception. Even if not named in a lawsuit many agents filed claims with their professional liability insurers when they discovered possible errors that could lead to a later claim.
Facing a tougher insurance market many title agents are regretting filing claims that did not escalate to a demand for damages from a property owner or title insurer. However, under claims made coverage they would have jeopardized coverage had they not alerted their insurer to the potential litigation.
The brokers are InsureTitleAgents.com are regularly presented with coverage issues and non-renewals, premium increases or sky-rocketing deductibles are commonplace after a claim in this market. Our first advice is always to not panic, even with adverse market conditions our expert brokers can secure coverage for almost any situation.
The first thing to do is compile as much information about the claim, why it happened and what has been done to prevent a re-occurrence. Insurance company underwriters take a lot of risk and live in constant fear of making the wrong decision. The better you can help them document their files that your past is not an adequate predictor of the future the more likely you are to receive competitive terms.
The second potential solution is to make sure you are working with an expert broker who understands the market and has broad underwriter access. Most speciality insurance companies only work with speciality brokers, your local generalist agent does not likely have the relationships to keep up to date on the newest companies offering terms to title agents and abstractors.
The third solution is to take a higher deductible or lower limit. Our brokers can make the case that past claims are not predictive of future ones but nothing helps your case like putting your money where your mouth is and taking a higher deductible. Exploring lower limits, especially if your work is focused on middle market homes and not commercial structures, can also save money and potentially shows you are comfortable retaining risk. As a general statement, those who are most likely to get sued are the most likely to buy excess insurance.
The last and riskiest solution is to ”go first year claims made”. For several years after first buying coverage your premium steps up as more years of exposure are added to the policy, the increases generally level off after five years. By resetting your retroactive date your policy and pricing goes back to year one. This means that any claims from events before this reset will not have coverage and you could potentially be in violation of any abstracting or title clearance contracts. However, when faced with a lack of low cost coverage options some agents make this decision.