Monday, February 28, 2011

Title Agents Business, and How To Keep Your Clothes On?

Really, really good agents can sometimes get in trouble through simple misunderstandings and missed communications. Sometimes that can happen with customers, and sometimes with brokers or carriers. I'm aware of a couple of situations recently that have popped up and need to make you aware so you don't find yourself with your pants (skirt, shorts, etc) around your ankles.

Most title agencies have some escrow exposure, it's just a part of what they do. While I understand that some professionals involved with title work do not have any involvement with escrow, they're in the minority.

At least one carrier has developed an endorsement to be included on the E&O policy issued to title agency businesses. That endorsement includes wording that basically says there's no coverage for ANY escrow transaction. According to a friend of mine on their book, at least two different agencies are about to find out how good their own E&O policy and carrier are, as two different claim scenarios have developed that the insurance carrier is denying on the basis of the endorsement wording.

Fortunately we didn't handle these accounts so I'm not sure which part of the "chain" failed, but I'm well acquainted with the carrier and I'm pretty sure it wasn't them. They provide all wording and endorsements with their quote, so likely either the agent or the broker failed to clearly communicate this limiting wording to their customer. And even if they did, it makes no sense to sell a title agency a policy that doesn't offer coverage for escrow transactions. That's almost like selling a restaurant a policy that excludes cooking.

(Yes, I know some "restaurants" don't cook anything. Don't be distracted by my analogy - since this is a claims made policy, even for those rare cases where the exposure doesn't exist now, if they ever did any escrow work in the past there's no coverage for that either). Now apply that to a title agency that doesn't currently do escrow work but did so in the past and their E&O policy has a 1996 retro date. That's a major problem if there's no escrow coverage now.

If you're not sure about the options available or would simply like to discuss the account(s) you have now, let us know. We're interested in staying fully dressed, just like you.

No comments:

Post a Comment