It has been requested that we bring to your attention certain provisions of the Colorado insurance statutes and regulations relating to the business of title insurance and which govern the issuance and content of title commitments and policies in this state. Several of the following issues are covered in Division of Insurance Regulation 3-5-1 with which you should be familiar because of the discussion of it in prior Stewart Bulletins.
The first of these provisions is the requirement in regulation 3-5-1 which provides that whenever a title entity (which includes agents as well as direct operations) provides the closing and settlement service that is in conjunction with the issuance of an owners policy of title insurance, it shall update the title insurance commitment from the date of issuance to as reasonably close to the time of closing as permitted by the applicable county real estate records. Such update shall include all impairments of record at the time of closing or as close thereto as permitted by the applicable county real estate records. Adequate documentation of evidence of this update must be maintained in your file for a period of at least seven years.
The next provision relates to a revision of the Division of Insurance's position on the location of the required anti-fraud statement. This statement is required by CRS 10-1-128. On all future title insurance policies that are issued it is now required by the Division of Insurance that the following anti-fraud statement be permanently affixed to the insurance policy by placing it on a separate rider page which is attached to the policy:
"It is unlawful to knowingly provide false, incomplete, or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policyholder or claimant for the purpose of defrauding or attempting to defraud the policyholder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado division of insurance within the department of regulatory agencies."
Another provision is also required by Regulation 3-5-1 and relates to the use of so called "generic exceptions." The provision states:
"Every title entity shall ensure that, except for standard or preprinted exceptions, all proposed title exceptions on a title commitment for the issuance of an owners policy of title insurance shall make reference to the recording information of the document to be excepted from coverage. In the case of unrecorded yet known impairments, the title entity may use other identifiable marks on the document, such as date, names of parties, case numbers, etc. Title entities shall not make use of generic exceptions unless there is receipt of written instructions signed by the proposed insured authorizing the use of such exceptions or a request from the proposed insured for a specific policy form has been made which makes use of such exceptions."
As you can see, this would prohibit the use of broad catch-all exceptions such as an exception for "all roads, easements, rights of way, ditches or canals affecting subject property" that is not a standard or preprinted exception. If you do get written instructions from the insured allowing the use of generic exceptions the instructions must be kept in the file for the required seven year period.
On another issue, CRS 10-2-704 provides time limits within which a title agent must remit to its underwriter the portion of the collected premium which it is owed and requires the underwriter to report late remittances past certain deadlines to the insurance commissioner. The two portions of the statute which make these requirements state:
"All premiums received, less commissions if authorized, shall be remitted to the insurer or its agent entitled thereto on or before the contractual due date or, if there is no contractual due date, within forty-five days after receipt"
"If any insurance producer has failed to account for any collected premium to the insurer to whom it is owing or to its agent entitled thereto for more than forty-five days after the contractual due date or, if there is no contractual due date, more that ninety days after receipt, the insurer or its agent shall promptly report such failure to the commissioner in writing."
Accurate Rate Calculations:
The importance of accurate calculation of rates charged for title insurance policies and endorsements cannot be over emphasized. Colorado statutes and insurance regulations require that no rates can be charged unless they are on the currently effective rate filing at the time the commitment/policy is contracted.
Seven Year Retention:
Finally, please keep in mind the requirement to keep evidence of compliance with Colorado insurance statutes and Regulation 3-5-1 in your files for the purposes of possible market conduct examinations for a period of at least seven years.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
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