March 7, 2005
By: Stacy Johnson
Undated--Purchasing insurance is a common-sense way to protect against catastrophe. But there's a type of insurance you buy that some say is overpriced. It's the title insurance you pay for when you buy a house.
Title insurance is basically a guarantee that real estate doesn't have title problems, such as unpaid taxes or repair bills, that could come back to haunt you. Definitely important coverage. But does it cost too much?
The price of title insurance is all over the map. According to one web site, insuring the title on a $180,000 house costs as little as $500 bucks in Iowa, and almost three times that price in New York. Some states fix rates. Others allow competition to set the cost. But is there competition?
A California study concluded that nearly 80 percent of policies are sold by only three companies and the industry is making excessive profits.
If that's true, one reason might be that most consumers don't understand title insurance, or shop it. They use whoever their real estate agent suggests. And critics say agents can be influenced by title insurance companies.
The title insurance industry's trade association declined our request for an interview, but issued this statement: "we absolutely encourage consumers to compare prices for title insurance, and to select their own title company rather than rely on a third party."
Whether you believe the critics or not, one thing is certain. When you buy title insurance, you're paying the bill. So ask questions and shop around. For Money Talks, I'm Stacy Johnson.
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