A new survey by the American Land Title Association (ALTA) reveals that title insurers doled out approximately $350 million in claims in 2000, belying consumer beliefs that the business does not pay out significant claims. Meanwhile, an ALTA survey of abstractor and title agent operations at 420 member companies shows that one in four property transactions has a title snag. Yet, despite the frequency of claims, losses were uncommon.

Much of the reason for the public's misperceived notion of title insurance payouts is its lack of understanding of how title insurance works or why it is important, says ATLA Executive Vice President James R. Maher. Title insurance is different from other coverage because it addresses actions that have already occurred, as opposed to what may occur in the future. A title search of public records determines who owns the property and what interests already exist in it, and any problems are generally resolved before a homebuyer closes on the property. In fact, many homebuyers are unaware of any problems because conflicts can be resolved without delaying the closing.

Although homeowners can suffer losses under their title insurance policies, this rarely occurs. "Title insurance not only buys you protection from financial losses, it buys you peace of mind," says Maher.

$350 Million in Title Claims Paid in 2000 Says American Land Title Association, Business Wire (04/11/02). Abstracts Copyright © 2002; Information Inc., Bethesda, Md.