What is the maximum monetary loss or damage a title insurer is liable for under a policy (including costs, attorney's fees, and expenses)?

What is the maximum monetary loss or damage a title insurer is liable for under a policy (including costs, attorney's fees, and expenses)?

• A. The Face Amount Of The Policy
• B. The Face Amount Of The Policy Plus Costs Excluding Attorney's Fees
• C. The Face Amount Of The Policy Plus Costs Plus Attorney's Fees Plus Expenses
• D. The Face Amount Of The Policy Less The Mortgage Payoff Amount

Answer: (C)

In a title policy, the insured’s loss isn’t limited to the face value of the policy. The policy is designed to restore the insured to the position they were in before the loss, which includes not only the diminished or encumbered title up to the policy amount but also the costs incurred to pursue or defend the claim. Those costs include attorney’s fees and other expenses necessary to resolve the title issue. So the insurer’s maximum liability covers the face amount of the policy plus the costs, attorney’s fees, and other expenses the insured incurs in connection with the claim. That’s why the best choice is the one that adds all of these recoverable items to the face amount. It reflects the full economic impact the insured can incur and that the policy is meant to indemnify. The other formulations either omit some recoverable costs or introduce a deduction that doesn’t align with typical title policy coverage.

In a title policy, the insured’s loss isn’t limited to the face value of the policy. The policy is designed to restore the insured to the position they were in before the loss, which includes not only the diminished or encumbered title up to the policy amount but also the costs incurred to pursue or defend the claim. Those costs include attorney’s fees and other expenses necessary to resolve the title issue. So the insurer’s maximum liability covers the face amount of the policy plus the costs, attorney’s fees, and other expenses the insured incurs in connection with the claim.

That’s why the best choice is the one that adds all of these recoverable items to the face amount. It reflects the full economic impact the insured can incur and that the policy is meant to indemnify. The other formulations either omit some recoverable costs or introduce a deduction that doesn’t align with typical title policy coverage.