Denial of Coverage and Title Insurance

If you have title insurance, pay attention. That company could be looking for a legal technicality to deny your claim.

In today's Toronto Star, columnist Bob Aaron talks about a case where a title insurer attempts to deny coverage with a technical legal argument. What the company isn't saying is that the coverage wasn't purchased; it's saying that even though the person filing the claim paid for insurance, they are not entitled to claim because of a complex legal argument.

This kind of thing has not yet been common in the title insurance arena. But get ready folks. Mr. Aaron says that this is exactly where title insurers may go, in an attempt to reduce claim pay-outs.

He has good ground to believe this. It's exactly where many other insurers have gone to reduce claim pay-outs. In fact, Mr. Aaron cites a case between Whiten vs Pilot Insurance where Pilot refused to pay a claim for the lose of a home due to fire. The reason was that Pilot Insurance insisted the fire was an arson, despite the fact that there was no information to support that theory.

There have been more and more attempts by insurers to deny valid claims. This has become a real problem in the insurance industry. As insurers attempt to reduce their liabilities,  and increase their profits, ethics may suffer. This has been happening across the industry.

Here's hoping that the title insurance business can keep more trust with its customers than other insurance segments.

Monique L. Attinger
Posted by on January 8,2007 at 12:20 PM
In fact, the even more worrisome trend is for this to be done by all sorts of insurers. I personally know of at least a couple of auto insurers who stalled on (legitimate) claims for years, and only paid when the claimants retained good legal counsel. Here's the deal: the longer an insurance company can stall on paying a claim, the more money that insurer makes because your premiums are being invested by the insurer. Unfortunately, there is no "law" against such behaviour, and the only way to avoid getting this kind of treatment from your insurer is to carefully research the company's claims payment history before you sign up. However, you also need to do this on an ongoing basis, as the company policy can change over time, and a good insurer can turn into a bad one. Be particularly aware if your insurer becomes a public company; this behaviour is much more prevalent among insurers that have the pressure to have high levels of profit each and every year.
Posted by WealthyGeek on January 8,2007 at 10:09 AM
I can understand both sides of this argument, though it's always frustrating when an insurer finds a way, legitimate or otherwise, not to pay a claim. I'm wondering if this does indeed set a dangerous precedent for title insurance. After all, would we tolerate such maneuvering from our auto or life insurance company? An unpaid claim always makes us question the very concept behind coverage itself, as in 'What the heck have I been paying you for all along?' Good story, though.
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