Some attorneys in real estate law also act as abstracters or title insurance agents for clients to provide them with more comprehensive services for their real estate transactions. An abstracter prepares summaries of recorded events or transactions affecting title to real property. A title insurance agent acts on behalf of a title insurance company to procure policies for insureds. Lawyers who offer abstracter or title insurance agent services might consider including an endorsement to their professional liability insurance policies to cover such activities.
Understanding Abstracter and Title Insurance Agent Coverage
Abstracter and title insurance agent coverage can provide supplemental professional liability coverage for real estate attorneys offering their clients abstracter and title insurance agent services. Real estate lawyers may provide abstracter services when they develop summaries of the recorded events in a property’s chain of title, including memoranda, notes, and references to chains of title, as well as tax and assessment searches. Attorneys may also act as title insurance agents to procure title insurance policies for clients purchasing properties. Attorneys who provide title insurance agent services in Wisconsin must also have an insurance agent license issued by the Office of the Commissioner of Insurance.
Abstracter and title insurance agent coverage can provide professional liability insurance through an endorsement to a real estate attorney’s professional liability policy. The endorsement acknowledges that an attorney provides abstracter or title insurance agent services.
Common Risks Faced by Lawyers in Title Work
Lawyers who offer abstracter or title insurance agent services through their law practice may face various liability risks, such as:
- Errors in title searches: Attorneys providing abstracter services may make mistakes in conducting public record searches, leading to omissions in the attorney’s title summary due to undiscovered liens, encumbrances, or breaks in the chain of title.
- Title defects: Lawyers who fail to identify title defects in an abstracter’s summary or when procuring title insurance may face liability issues, as such defects could cause problems in obtaining coverage under a title insurance policy.
- Missed deadlines/filing mistakes: Attorneys may miss deadlines or make filing omissions when obtaining title insurance for clients, which could lead to the failure of title insurance coverage.
- Procurement of inadequate coverage: Lawyers acting as title insurance agents may procure a policy that provides incorrect or inadequate coverage, leaving clients without critical coverage.
How Abstracter and Title Insurance Agent Coverage Protects Lawyers
Endorsements providing abstracter or title insurance agent coverage can protect lawyers who provide these supplemental services to clients. Professional liability coverage can include coverage for the following:
- Defense costs: Coverage can provide money for defense costs, including legal and expert witness fees; the insurance company can hire defense counsel to defend an insured attorney in a professional negligence claim.
- Errors and omissions: Abstracter/title insurance agent coverage may provide errors and omissions coverage, which provides liability coverage for an insured’s mistakes in conducting title searches or completing title insurance applications.
- Fraud/misrepresentation claims: Coverage can also protect attorneys from clients’ fraud or negligent misrepresentation claims alleging that the attorney provided misleading information or advice as an abstracter or title insurance agent.
- Title defects: Professional liability coverage can also help attorneys facing legal claims address undiscovered title issues to protect the attorney from potentially significant financial loss from liability owed to their client.
The Importance of Coverage
Standard legal malpractice insurance policies may not provide coverage for abstracter or title insurance agent services, as such services do not fall within the normal scope of law practice. As a result, real estate attorneys who offer these supplemental services can purchase endorsements that extend the scope of their professional liability insurance to cover these activities. Some of the facts that attorneys should consider when purchasing supplemental coverage for abstracter or title insurance agent work include:
- Policy limits: Lawyers should ensure that their abstracter and title insurance agent coverage has a policy limit high enough to cover any potential financial liability the lawyer might incur due to errors or negligence.
- Exclusions: Attorneys should carefully review the endorsement language to understand the scope of coverage exclusions, which may bar coverage for specific actions or services the attorney might undertake as an abstracter or title insurance agent.
- Additional endorsements: If a standard endorsement for abstracter or title insurance agent coverage does not fully cover the scope of an attorney’s services, they may need to negotiate additional endorsements to ensure they do not have any gaps in coverage.
Contact WILMIC Today to Learn More About Abstracter and Title Insurance Agent Coverage
If you offer abstracter or title insurance agent services as part of your real estate law practice, your standard malpractice insurance policy may not provide coverage for those services. Contact WILMIC today for a consultation to learn more about our organization and our coverage offerings for abstracter and title insurance agent services.