Over at this site, http://boards.straightdope.com/sdmb/showthread.php?threadid=137067
I asked a question regarding title insurance. Then I got to thinking: I have never heard of any of these insurance companies ever having to pay a claim. Have you?
Owning a title company must be a license to print money.
I know of a situation where a title company should have had to pay a claim. I can’t remember the exact problem, but I was working for a mortgage brokerage, and the title company screwed up. The borrower retained a lawyer, and the lawyer suggested going after the brokerage. We hadn’t made the error, of course, but we were the little company, the title company was a huge NYSE-traded corporation, they figured that we would be easier to get. My loan agent spent a day at court explaing to the judge what had happened, and got off scott free. He felt bad for the borrower, who had been talked into suing the wrong party and had been screwed yet again.
I’ve heard of cases where it was an absolute lifesaver. Like paying off a lien that hadn’t shown up in a title search, or paying for a variance where one should have been obtained years ago.
My day job is with a very large real estate developer. We got one of our title insurance companies to pay $500,000 and change a couple of months ago - I’d say that makes it worthwhile.
Lenders often require title insurance because it insures the priority of their lien - and keeps them from getting screwed. Try to think of it as part of the cost of a loan, if it helps. Claims don’t happen very often, but when they do, it can save your butt.
Note: IANAL. YMMV. IMHO. M-O-U-S-E.
Let’s see a plot of dirt which sold for $8 in 1887 has a lien on it for $4.00 from 1898, so you spend money on insurance for this 
?
It doesn’t always make sense. Like if there is a big piece of property with two dozen homes on it, each home has to get insurance, but it should only be necessary for the property itself, not for each unit, right? That way they make a lot of money insuring each home.
Title Companies do pay out. All the time. In the 12 months ending 12/31/01, First American Title’s “claims paid” column was $153,000,000.00.Cite.
A family in the same subdivision as me lost their house because the SBA loan to the developer was not paid off and the SBA held a lien on the property. The family did not have title insurance.
Title insurance sounds a pretty good idea to me.
Yeah, but they had revenue of about 3.75 BILLION!! They paid claims of about four cents on every dollar of revenue! Any bookie would consider that he had died and gone to heaven to get that return.
What I don’t understand about titles: you pay a lawyer a lot of money to do a title search-so why then should YOU have to buy insurance? Seems like you ought to be covered by the lawyer’s malpractice insurance!
But a story: back around 1976, in the town of MASHPEE (on Cape Cod, in Massachusetts), a couple of shyster lawyers from NYC found an indian tribe! They filed a lawsuit claiming that the descendents of the maspee Indians (the Wampanoags) in fact owned the entire town! For around 5 years you couldn’t buy or sell any property in mashpee, untill a federal judge ruled that the “indians” were not a tribe! This is one case where title insurance was needed!
I heard the lawyers were expecting a huge windfall-possibly as much as $50 million!