Released: July 20, 2006

California targets title insurance premiums

Source: By Marc Lifsher, Los Angeles Times (Free Registration)

California Insurance Commissioner John Garamendi plans to unveil regulations today that could save homeowners an estimated $1 billion a year by slashing the premiums they pay for property title insurance, which he said are “excessively high.”

The regulations would force companies to cut rates an average of 23% on title insurance needed to close property sales. Rates on title insurance for loan refinancings would drop 16%, and the cost of some escrow services would decline by an average of 27%, according to the state Department of Insurance.

The price cuts could be in place by March 1 if the regulations, which are authorized by a 1974 law, receive final approval this year by the Office of Administrative Law.

Title insurance is required by lenders to guarantee that there are no other ownership claims, such as tax liens or utility easements, on a property they are financing.

The rate is generally a percentage of a property’s sales price. Premiums charged by different companies, which are generally paid by the sellers, can run as high as $2,500 on the sale of a $750,000 house, according to a broker’s rate sheet.

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