Title — continued from Page 50
damages, Egan, are thus available in an action against a title insurance company. Some title insurers seem to be
unaware of the fact that insurance bad- faith rules apply to them as they do to any insurance company. Consumers are often faced with title insurance company adjusters who simply have no idea that when they act unreasonably and fail to conduct an adequate investigation, they will be liable for bad faith. • First-party title-insurance cases In the event that there is a defect in
title that appears in public records but is not listed in the policy, the measure of damages is generally the diminution in value of the property. If, for example, there is an easement on the property that is covered under the policy because it is in the public records but not listed on the policy, the claim under the policy would
be the value of the property at the time of purchase without the easement less the value of the property at the time of pur- chase with the easement disclosed. There are, however, policy limits.
These limits, however, infrequently (but not never) come into play in most title- insurance claims since the limits are usu- ally the purchase price of the property. Hence, if the covered defect results in the property being worthless to the insured, there is usually sufficient coverage. The problem here lies in what are frequently very substantial transaction costs such as escrow fees, insurance, loan fees and so forth that can easily be three or four per- cent of the purchase price. There may be inadequate coverage if the defect renders the property worthless to the insured. Under most title-insurance policies,
the insurer may have the option of curing
the defect by, for example, purchasing the easement back from its owner, although in many cases this approach may be impossi- ble if it is owned by the government or a public utility. In addition to diminution in value or
curing the defect, the insured may be entitled to other damages under the poli- cy. Costs that would not have occurred except for the existence of the covered defect are covered. (Native Sun Invest. Group v. Ticor Title Ins. Co. (1987) 189 Cal.App.3d 1265, 1274.) • Third-party title-insurance cases Third-party claims are also covered
under a title-insurance policy to protect a buyer against lawsuits that, for example, seek to enforce a lien that is recorded but was not included in the policy. In such claims, the insured will be entitled to have
See Title, Page 54
Neurosurgery • Orthopedic Surgery • Neurology • General / Vascular Surgery • Pain Management General Medicine • Plastic Surgery • Psychology • Physical Therapy • Chiropractic Diagnostics (MRI/CT Scan/X-ray) • Liens Accepted
52— The Advocate Magazine JUNE 2011
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