 |
In the PressBusiness Outlook - Thursday, March 10, 2005 In 1999 the New Mexico title insurance companies had a law passed immunizing themselves from damages they cause innocent title policyholders as the result of negligent title searches. A fierce battle to remove that immunity language is presently being fought in this session of the New Mexico legislature. We New Mexican are compelled by out lenders to buy title insurance whenever we purchase a financed home, and are charged premiums that cost about 1 percent of the value of the purchase price of out new home. we all assume that if the title insurer failed to tell us about an easement, encumbrance or other defect in the title, that our title policy is there to protect us and to pay to have a good attorney solve the problem or otherwise have out damages reimbursed in New Mexico, the assumption that title insurers must answer for their own incompetence is wrong. How could this be? Incredibly, a New Mexico statute shifts the responsibility for the damages that result from a negligent title insurance search conducted in the first place. This unfair, anti-consumer statue is not in the best interest of anyone. In New Mexico, with rare exception, the parties involved in any financed real estate transaction are compelled to pay for title insurance. As part of the closing fees, a title search is done. If the title insurance company or its agent makes an error in the title search resulting in damagers to the insured, under the express legislative intent of this statue, the title insurance company can refuse to pay on the grounds that it is immune from liability because the stated special interest purpose of the statue is not to protect the insured who pad for the title premium but to enhance the financial stability. I have represented two victims of hidden title defects in the last three years who were refused coverage for damager resulting from the admitted errors the title insurer cause by its on being. In the both cases, the insurer denied coverage under the language of Section 59A-30-11A. Other New Mexico lawyers have told me of similar instances since 1999. If lawyers were so favored, there would be a statute that immunizes lawyers from legal malpractice because, using the same logic, the practice of law is not to benefit the client who paid for the services “but solely for the purposes of enhancing the financial stability of lawyers.” No one in his right mind would stand for such legislation. A dangerous world of irresponsible incompetence would be encourages if medical doctors, accountants, stockbrokers, real estate agents and lawyers had similar immunity parachutes enabling them to simply drift away from damagers their negligence caused patients, customers and clients. People do not intend to buy title insurance to enhance the wealth of insurers but to receive protection. In New Mexico, that protection is illusory. Title insurance companies do not need monopolistic enhancement of their income and wealth. New Mexico is one of 16 states that regulate title insurance companies. The public records of their regulator, the New Mexico superintendent of insurance, prove that title insurance companies in New Mexico only have an average of 4 percent loss ratio. In other words, they only pay $4 on claims for every $100 they collect in premiums. Compare that to your auto and homeowner’s insurers who pay claims of more or less 85 percent of every premium dollar they collect. The title insurance companies claim
making them liable for their own incompetence means premiums will
dramatically rise because they will have to pay claims that today
they can refuse. History belies the argument. From 1993
to 1999, title insurers were liable for the damages their searches
and title examination caused their insurers. |
||||||
