You’re a property buyer with two clear questions: what is title insurance and how are title insurance prices regulated in NC? Opening the doors to your new home or business should be a relief. An smart buyer is a happy buyer. You are required to have title insurance in North Carolina, so we at Tryon Title want you be clear on precisely what you’re paying for. Join us as we explore what title insurance regulation looks like, and how it affects your wallet.
Who regulates NC title insurance?
The North Carolina Department of Insurance requires every title insurer file all title insurance rates and changes. A process called “prior approval” requires that insurers file their proposed rates, then wait for formal review and approval. Only approved rates can be charged by insurance providers.
North Carolina takes a slightly more hands-on regulatory stance than some states. In a number of other states, file-and-use allows insurers to set rates (rather than “propose” them). In addition, these other states don’t require explicit approval. Rates here can be a little more stable due to NC’s direct regulation, which means a less frightening insurance market for you.
How are title insurance prices decided?
Title insurance price is composed of your premium and service fees. Title companies decide policy price based on your method of title purchase, the underwriting services provided, and purchase cost of your home. Premiums are regulated, while service fees usually are not.
Title insurance premiums
Premiums are charged to prevent and reduce risk of any past title issues from impacting your property ownership. Four of every five premium dollars goes towards the work of your title professionals. The remaining fifth composes your insurance policy. Your premium may be offered in one of two forms: regular rates and reissue rates.
Regular rates cover any title that has not been insured within the past 10 years.
Reissue rates are discounted, providing updated coverage on a title insured sooner than 10 years ago, or on a refinance of a prior mortgage.
Owner’s Insurance vs. Lender’s Insurance
The price is decided differently for Owner’s Insurance and Lender’s Insurance. Both are charged based on a model of “x amount of dollars per $1000.” Owner’s Insurance is paid for the property cost. Lender’s Insurance is charged based on a slightly different model that covers the loan amount. You’ll need both if you have a mortgage.
Discounts are available depending on your situation. Purchasing Lender’s and Owner’s Insurance at the same time may offer you a discount on either or both. You may also lower your premiums as a first-time homebuyer or in bulk subdivision purchases. Be sure to talk with your insurer for any possible price reductions.
Title insurance service fees
Service fees for title insurance are charged for any underwriting processes not already included in your premium. These fees appear on your final invoice for your property closing transactions. The types of fees you may encounter depend on the underwriting done by your insurance company.
Search fees and abstracting fees revolve around searching for public records.
Examination fees are charged for examining your title.
Attorney fees cover legal costs resulting from NC state requirements that insurance policy be based on an attorney’s opinion.
Closing fees exist to close your sale or your mortgage.
Since these charges are normally unregulated, you should always talk with your insurer regardless of which state you’re in. The lack of regulation can be an advantage, allowing you to negotiate your service pricing. Always ask, or you may be subject to unnecessary charges that leave your wallet feeling a little light.
Takeaways on title insurances pricing
You might want to take a breath– title insurance can feel a bit overwhelming at times. That’s okay, because you’ve taken a major step towards an empowered property purchase. Getting informed is the first step and you’ve learned:
Your insurer must have their premium rates approved by the North Carolina Department of Insurance.
Prices are more flexible than they seem, despite the required state regulations.
You should always know what service fees are being charged along with your insurance (and why).
It is in your best interest to shop around for discounts on premiums and service fees.
Take the time to ask questions and negotiate your insurance charges. Your wallet will be glad you did. Still have questions? Here at Tryon Title, we have the freedom to put the customer first. If you have any questions or need help finding the right policy for you, set up a chat with us.