I’m talking about title insurance. Did you know that title insurance insures BACKWARD? Everything else you buy insurance for, is to protect/provide against future events, things that may or may not occur. Title insurance insures against things that have already happened. It protects against known events. I want a gig like that!
Of course it’s not a perfect system. Title insurance claims do get paid out. When someone buys real property, the title company searches through the chain of title. They discover who bought it from whom…did they have the legal right to sell the property?… have there been disputes over ownership in the past?…things like that. If everything appears to be in order, the title company will issue a title insurance policy. It essentially states that the buyer has clear title to the property. However, because people make mistakes, claims do occur. If someone else can be found to be the legal and rightful owner of the property, that’s when the insurance policy kicks in.
Imagine you’re the tenth owner of a house and the land upon which it sits. One day someone shows up at your door (waving a piece of foolscap around with faded ink signatures),
saying, “This is my property! My great great great uncle Ichabod left it to me!” Should that person be correct and have legal claim to the property, the title insurance would pay you the purchase price of the house (some companies have an automatic inflationary clause which provides current market value on the house…actually, they all may do that, but it’s President’s Day so the title companies are closed and I can’t check!). Ichabod’s descendant moves in, you buy a new house with the money provided by the title insurance claim and everything is square.
Actually, it doesn’t feel square, because you loved your house. But, other than that…
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