$16 billion for title insurance?

If you could scan the entire American economy for money that is thrown away --  gift cards never redeemed, home gyms never used, etc. -- one of the biggest piles you would find is the title insurance industry. Sixteen billion a year -- that's nearly double the size of what Hollywood movies gross in a year in American theaters.

From LATimes.com: "Americans spend more than $16 billion annually for title insurance when buying, selling or refinancing their homes. But few people question the expense, even though they're probably paying too much, say consumer advocates and government regulators."

More: "What's more, title insurers have been fined repeatedly for illegally giving concert tickets, trips and even cash kickbacks to real estate agencies, lenders and builders. Consumers typically go with a recommendation from one of those sources, experts say, and may not even realize that they have a choice."

How out of whack is title insurance in California?
In California, coverage that protects the buyer would probably cost about $1,200 to nearly $2,000 for a $500,000 home. In Iowa, the only state with a government-run title insurance program, coverage for a $500,000 home -- including lawyers' fees -- totals about $500.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.

Comments

[francis]

Jill,
I've been trying to get Old Republic to honor a five year old claim to clear unknown title defect/encumbrance. They also insure neighbor who knew when he signed his policy he was falsely claiming (by notice to seller and predecessors' affadavits) rights to my 17 year owned property and dock. My legal fees were denied for no proof of claim-though I have fax rec't to agent who said no coverage until lawsuit. Neighbor's title claim to dock accepted while mine was rejected for being on US gov't property. Insurer threatened to deny all coverage for my lack of cooperation by not signing last of their FOUR proposed agreements each ignoring affadavits and my original survey. They wouldn't tell me whether I'm covered against potential lawsuit if I didn't sign... My atty finally got their attention with bad faith letter but then I was assigned unrated "insurance defense" atty while neighbor got assigned AV peer-rated real estate litigation atty. I'll let you know how it goes if I'm still alive.