What Is An Independent Title Insurance Agency?

Title Insurance Document

When shopping to insure your property title, it’s crucial to know about independent title insurance agencies. There are many advantages to using independent title services. Still, one of the biggest is that doing so allows you- the customer- to access the most significant savings on your insurance coverage. In the best-case scenario, you could potentially save hundreds of dollars! Everyone likes saving money and, when you learn about the other advantages of using an independent title agency, you’re sure to see the benefit of using one for yourself. 

Here at Tryon Title, we’re aware that many homeowners don’t understand what an independent title insurance agency is or why they should use one for their property. If you find yourself curious as to why and how these people help you, continue reading! Our mission is to ensure that you are adequately informed so that you can make the wisest decision for your property. Let’s get started with the basics of independent title services!

Everything You Need to Know About Title Insurance Policies

Before discussing the benefits of working with an independent title insurance agency, let’s start by talking about how insurers operate. In this section, we’ll discuss how insurers operate by describing the main activities of a title insurer: title search and underwriting. We’ll also discuss the two types of title insurance policies that you should know about when shopping around for independent title services. 

What is a Title Search?

Searching Through Document

Put simply, a title search is a search conducted for documents on a specific property. This search uncovers whether or not your property belongs entirely to you. The property title, which details who has legal ownership of a home, doesn’t always contain updated information about liens on a property. At the same time, while a property title is comprehensive, it also may not include a complete history of the property. 

A title search looks for all records and sources to offer all available information about a specific property. If anyone other than you has a claim on the property, a title search will uncover this. Additionally, a title search includes a report of any deed restrictions. This will tell you if any limits exist on how the property can be used. Deed restrictions are especially critical to be aware of before purchasing a property so that you know what you’re getting into. Finally, a title search also reveals any easements on a property as well as property boundaries. 

What is Underwriting?

Mortgage Underwriting Document

If you find that there are ownership flaws in your title’s history after conducting a title search, the process of underwriting works to check and resolve such faults. Because the documents revealed during a title search may contain any number of problems, an underwriter works with an insurer’s team to prevent any potential claims to your property before they arise. 

Types of Title Insurance Policies You Should Know About

Your closing costs might include two types of title insurance policies, but you may not know how these types differ. The two types of title insurance policies include lender’s policies and owner’s policies. 

The lender’s policy, also known as a loan policy, is required by most lending institutions when mortgaging a home. A lender’s policy is necessary to ensure a lending institution’s security interest in the property.  This type of title insurance policy protects the bank (or another lending institution) for as long as they maintain a vested interest in the property. In most cases, this interest ends once the mortgage is paid in full.

On the other hand, an owner’s policy is a policy meant to protect the buyer rather than the lending institution. By getting an owner’s policy, you protect your investment and the ownership rights that come with it. Such a policy usually covers your rights as a homeowner for as long as you (or your heirs) have an interest in the property. 

Both types of title insurance policies will not only pay valid claims and legal fees to defend against hidden title issues (such as those found in a title search) but also work to decrease the risks associated with ownership of a property. This is because a title search is provided before the issuing of either title insurance policy. 

What’s the Difference Between Title Companies and Title Agencies?

Now that you understand the main activities performed by insurers and the two types of title insurance policies, it’s time to learn where these insurance gurus work. Both underwriters and title searchers work at either a title company or a title agency. To fully understand the advantages of working with an independent title insurance agency, you need to know how these entities differ. Let’s look at each in-depth.

Title Companies

A title company works as the core insurer that directly issues policies to the current title owners and lenders. The primary duty of a title company is to verify that the real estate’s title is legitimately given to the home buyer. They make sure that a seller does indeed have the right to sell the property to a buyer. 

Once a title insurance company has verified the rights of a seller, they back that guarantee with title insurance. As discussed in the previous section, title insurance (depending on the type) protects the lender and owner if a claim is made on the property in the future. In some cases, the title insurance company is also responsible for conducting the closing. This involves maintaining escrow accounts where your closing costs will be kept until the day you close your loan. In some cases, the company that handles the closing will be different from the company dealing with the title and insurance. 

Title insurance companies directly employ both underwriters and title searchers. For this reason, professionals hired by title insurance companies have the added incentive to serve the needs of the company above the customer’s. There are four major title insurance companies in the United States, including Fidelity National Mortgage, Old Republic National Title Insurance Company, First American Corporation, and Stewart Title Guaranty Company. 

Title Agencies

A title agency is a subcontractor of a title company that provides title services before the title company issues the final title insurance policy. Similar to title insurance companies, underwriters and title searchers are directly employed by title agencies. Unlike title insurance companies, an agency helps the home buyer complete all necessary paperwork, making them the rightful property owner. 

Like a title insurance company, these agencies usually have the same motivation to serve the company and its financial partners above all else. There are exceptions to this rule, however: independent title insurance agencies. 

What Are the Advantages of Independent Title Services?

An independent title insurance agency is a type of title insurance agency that refrains from engaging in affiliated business arrangements and joint ventures between real estate settlement service providers. By remaining a neutral third party, independent title agents earn your business through the quality of the independent title services they provide. On the other hand, traditional title insurance agencies pay kickbacks to obtain a referral of your business. 

So what are the real advantages of working with an independent title insurance agency, and what can you expect? Here are just a few of the benefits.

No Conflicts of Interest

An independent title insurance agency is a business that relies on good customer relationships alone for continued business. You are an independent title agency’s biggest incentive. This results in them working with your interests at heart as they find you the best insurance price. The same can’t be said with a traditional title insurance agency. As stated, title insurance agents are motivated by the financial interests of the company that employs them. 

A Local Team Working For You

Since title agencies are far more plentiful in numbers than title companies. This means there are likely many more located near you. When working with an independent title agency, you’re granted the opportunity to get to know your underwriters and title searchers personally (as well as other staff). What’s more, those professionals are members of your local community, and you’ll enjoy the benefits of a local team working with you every step of the way. Chances are, you may even already know some of them!

Better Interaction Among Team Members

Many independent title agencies have much smaller teams working for them than a traditional title company does. With fewer employees, the chances are high that there will be better communication between each staff member. Better communication between staff members results in quicker resolutions of title problems and various other issues. The same can’t necessarily be said of an affiliated business arrangement such as a title insurance company which may be part of a large conglomerate. 

Convenience and Accessibility

Considering that an independent title insurance agency is a local entity, they are far more accessible and prioritize your convenience. Rather than getting lost in the crowd as just another number, you’re granted a more personalized experience. In this way, a better result is all but guaranteed. Title insurance is no exception.

Saves You Time

An independent title agency is without conflicts of interest, and this allows you to shop around with comfort and efficiency. Employees within an independent title agency tend to work with various title companies. This gives them access to data that will save you big when it comes time to purchase. Rather than searching for deals yourself, this is a one-stop-shop experience. They will give you a great experience in service while you shop around for the best possible title company. 

Why is Selecting an Independent Title Insurance Agency So Important?

Now that you know some of the primary benefits of independent title services, you can see why they’re important. Still, there are a few more things you should know about selecting an independent title insurance agency. 

When buying a home, you will find yourself working with three groups of people. These include a real estate agent, a mortgage lender, and your “settlement team.” The process of buying a home is complex and involves legally binding contracts. In many cases, this also involves large sums of cash. Having three independent groups working on your transaction allows you to establish a system of checks and balances. This works in your favor as the homeowner. However, some companies have vested interests in all three aspects of your real estate transaction.

Traditional title insurance companies encourage their staff to steer homebuyers through every step of the home buying process to represent their own interests. This can be outrageously expensive to the consumer. Traditional insurance title companies often have ventures in the mortgage lending industry and, as a result, participate in profit-sharing arrangements. This is where things like referral fees come into play. 

Put simply, referral fees increase closing costs, and this is anything but consumer-friendly. Some reports show that 50 percent or more of title insurance premiums went to mortgage lending and real estate companies for referral fees. In comparison, only 5 percent went towards insurance claims, according to the Government Accountability Office. While this practice is technically legal, it’s most definitely anti-consumer. In light of this, homebuyers have quickly found that independent title services can save them thousands of dollars in closing costs. 

Do the Best Thing For Your Property: Keep Your Insurance Independent

Purchasing a home is life-changing. Through a traditional title insurance company, you can expect to spend more money as they steer you through the homebuying process. Using an independent title insurance agency, however, you can operate knowing that your best interests are of primary concern. 

Put simply, when you go independent, you have far more options. Options and well-informed minds work better than peanut butter and jelly and save you just as much dough. But don’t just listen to us: we at Tryon Title encourage you to shop around and discover the truth. If you want to learn more, let’s set up a chat. We’ll show you why our service is one of the most reliable in North Carolina.