Survey: Most Title Companies Have E&O Coverage

More than 95 percent of title companies have errors and omissions (E&O) insurance coverage, according to a nationally representative survey conducted last year by ALTA’s Data & Analytics Work Group. Additionally, almost a quarter have made claims on that insurance over the past five years. (see chart below)

The survey of over 650 title agents nationwide was conducted in February 2018 by ALTA’s Data & Analytics Work Group, a group of agents and underwriters from ALTA’s two section executive committees. The survey asked agents about their experience with different insurance coverages, including E&O, fidelity bonds and cyber insurances. This article is the first in a series designed to offer insight into the various types insurance supporting the title industry.

E&O insurance provides coverage if a client holds you responsible for a service you provided, or failed to provide, that did not have the expected or promised results. There are numerous risks that can warrant protection with an E&O policy. 

The survey found that larger title companies are more likely to have E&O policies. All title companies with more than 50 employees reported having E&O insurance. This compares to 94 percent of title agents with less than 10 employees that have E&O policies.

Additional Findings:

• The most popular Per Claim coverage amount is $1 million to $2 million. Regardless of their size, the majority of title agents reported Per Claim coverage of more than $1 million, but less than $2 million.
• Smaller agents appear to prefer smaller Per Claim Deductibles. For example, those agents with less than $2.5 million in annual revenue reported a deductible less than $15,000. However, agents with over $15 million in annual revenue selected various higher deductibles, up to more than $50,000. One possible explanation is larger agents may dedicate more capital or balance sheet to “self-insuring” their risk, indicating an apparent preference for a catastrophic policy approach.

If you require more resources and information about E&O Insurance or other insurance coverages supporting the title industry, you can find them at ALTA’s Marketplace. 

Ultimately, the decisions around E&O policies are worth exploring with an insurance broker or agent. They can assist you in designing insurance coverage to align your business, its risk, risk tolerance, contract expectations and budget to an appropriate coverage.

Andrew “Andy” Wert, a vice president in the Agency Division at First American Title Insurance Company, serves on ALTA’s Data & Analytics Committee. He can be reached at [email protected].

This article is intended for educational and informational purposes only. The views and opinions expressed in this article are solely those of this author, and do not necessarily reflect the views, opinions, or policies of this author’s employer, First American Title Insurance Company.