Comparing Owner Title Coverage
with Home Title Lock
You may have seen advertisements on the Web or elsewhere for Home Title Lock, along with warnings about how house stealing is the latest cyberthreat and how deed fraud is reaching epidemic levels. As of April 21, 2020, there was an example on the company’s Website regarding “Just How Easy Title Fraud Can Happen” because so much public information, including property title records, is available online. The Website notes that title fraud is not covered by “Your Bank, Homeowners Insurance or Identity Theft Protection” and therefore “You need Home Title Lock to Protect Your Property.” So, what is Home Title Lock?
According to the company’s Website, Home Title Lock is a subscription-based monitoring and notification service. In the company’s own words: “For pennies a day, Home Title Lock posts a virtual perimeter around your home's online title and mortgage. The instant we detect anyone tampering with your title or mortgage, we're on it alerting you and mobilizing to help shut it down. In the unlikely event your title or mortgage is compromised, our U.S. based Resolution Experts will assist until the matter is resolved.” It is not, however, advertised as an insurance product. The point of the service is to detect the fraud and notify you so that you can stop it, presumably by involving law enforcement.
An online article by Kiplinger says, “You don’t need to pay a company to protect you from criminals who put their names on your home title. You can protect yourself for free with these steps.” The article continues: “Home Title Lock is one of the services that monitor your home’s deed 24/7 to prevent title fraud, but you can protect yourself - for free - by periodically checking your property records” online. The Kiplinger article also advises to notify law enforcement and the municipality or county if one stops receiving usual bills or receives some new or surprising bills, or otherwise suspects something is wrong. See
Ask Kip: How To Protect Your Home from Deed Theft
by Pat Mertz Esswein, Associate Editor, June 27, 2019. Kiplinger.com.
Another online article makes the following observations: “Home Title Lock … promises to alert you to anything affecting your home’s title…however, it is not a traditional insurance offering and there’s likely no legal obligation for them to step in with money to shore up your losses financially if you have to file a claim.” See
Home Title Lock – Is it the Same as Home Title Insurance?
by Clark Howard Staff April 14, 2020. Clark Howard, Inc. The second article concludes: “Advertisements may try to convince you to buy Home Title Lock. But if you get your own title insurance, the monitoring service they provide really isn’t necessary. Simply knowing that there are things going on affecting your title is not the same as being protected if someone challenges the ownership of your home. That’s what home title insurance is for.”
It is important to remember that there is protection against fraud as well as a duty to defend the title in both the Standard and the Expanded Owner Policies
. There is some difference in the protection offered between the two policies, and this difference highlights one of the lesser known benefits of the Expanded Owner (Homeowner’s) Policy. Let’s examine two scenarios:
1. An owner sells a home to a buyer, who purchases a Standard Owner Policy. Unknown to both seller and buyer, prior to the sale a fraudster posing as the seller forges a deed and purports to convey the same property to Party B, who manages to record minutes before the Insured’s deed is recorded. In this case, the Insured’s title is protected under Covered Risk 2(a) because the fraud existed at the Date of Policy, and CATIC also has a duty to defend.
2. Similar facts to the first case except that, after the Insured buys the property and purchases an Owner’s Policy, the fraudster forges a deed and conveys to Party B. In other words, the forgery occurs after the Date of Policy. Technically, this would be a post-policy event in a Standard Owner Policy. CATIC could choose to exercise its option under the policy to take appropriate action and defend the Insured, in order to defeat Party B’s claim as quickly as possible. If the homeowner had purchased an Expanded Owner Policy, however, not only would CATIC be obligated to defend, CATIC would also be obligated to pay loss or damage resulting from the claim on the title. While both the Expanded Owner Policy and the Standard Owner Policy have Covered Risks insuring against loss or damage resulting from fraud, together Covered Risks 3 and 7 in the Expanded Owner Policy also provide coverage against the risk of loss resulting from forgery or impersonation occurring after the Policy Date.
The product that provides the most effective protection against loss resulting from title fraud is a title insurance policy.