Underwriting Manual: Affirmative Insurance

State Supplements

View state supplements to the national underwriting manual.

Underwriting Manual Subtopic

In General

V 3

Affirmative insurance is also known as affirmative coverage.

Underwriting Manual Subtopic

Constraints On Affirmative Insurance

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There may be some constraints upon the offering of affirmative coverage. For example:

  • In the majority of states, title insurance policy forms and endorsements are required by law to be filed and approved by the state insurance authorities. In some of these states, laws require filing and approval, prior to use of the forms ("prior approval"). Others require filing and deem the forms approved, unless rejected by the Insurance Commissioner within the statutory time limit. A third group of state laws simply require that the forms be filed before the company can use the forms ("file and use").

  • Several states have laws and insurance department regulations that do not authorize certain special coverages (zoning, usury, mechanic's coverage during construction, etc.)

  • In New Mexico and Texas, state law directs the respective state insurance commissioners to promulgate title insurance policies and endorsements; and these forms cannot be modified.

Underwriting Manual Subtopic

Standard Affirmative Coverages By ALTA 1987, 1990, 1992, and 2006 Title Policies

V 4

The standard affirmative coverages offered by ALTA policies are the following:

  • Vesting of title other than as stated (all policies)
  • Defects, liens, and encumbrances (all policies)
  • Lack of right of access (all policies)
  • Unmarketability of title (all policies)
  • Invalidity or unenforceability of insured instrument (loan policy)
  • Priority of any other lien or encumbrance over insured mortgage (loan policy)
  • Priority of any statutory lien (unrecorded mechanic's lien) over insured instrument (loan policy)
  • Invalidity or unenforceability of any assignment of insured instrument or failure of such assignment to vest title as stated (loan policy)

(Additional) Standard Affirmative Coverages By ALTA 2006 Title Policies  

The standard affirmative coverages offered by ALTA 2006 policies include the covered risks listed above, along with the following:

·         Defects expressly include exclusion

·         Defects expressly include failure to comply with electronic law

·         Defects expressly include failure to promptly, file, record, or index

·         Taxes are not yet due and payable

·         Defects expressly include encroachments, violation, and adverse circumstances disclosed by accurate survey

·         Encroachments expressly include those onto adjoining land

·         Gap Coverage

Underwriting Manual Subtopic

Endorsement Forms Relative To The Insurance Provisions Of The Policy

V 3

ALTA Forms Of Endorsements

There are numerous endorsements for the basic policies at this time.

Other Forms Of Title Insurance Endorsements

A variety of title risks may be insured through a form of endorsement, subject to numerous jurisdictional constraints, and Company approval. Most endorsements are the product of market demand and local practices.

Because of the risk and complexity involved, many endorsements require prior underwriter approval, including but not limited to the following:

  • Automatic subordinations
  • Insuring tidelands or submerged lands
  • Insuring Native American lands
  • Insuring a mineral estate or water rights separate and apart from the surface interest
  • Insuring title to railroad property
  • Creditors' rights coverage
  • Synthetic leases
  • Mechanic's lien issues
  • Going concern
  • Option endorsements insuring priority over future matters
  • Re-characterization
  • Seafirst/Seattle
  • Endorsements of unique characters other than commonly issued or customary endorsements

Underwriting Manual Subtopic

The Deletion of an Exclusion or Exception does not provide Affirmative Coverage

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Written authorization from the Company is required to delete or modify any exclusion from coverage in the title insurance policy by endorsement; and the Company requires written approval of the endorsement language.


Underwriting Manual Subtopic

Insuring Over

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In some cases and under specific conditions, certain matters shown as general or specific exceptions in Schedule B of the policies are "insured over"; that is, affirmative insurance is provided against "loss or damage," not exceeding the amount of the policy, as a result of such matters.

Additonal Reference:  Stewart Bulletin SLS2007007

Underwriting Manual Subtopic

Where To Insure Over

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In some cases and under specific conditions, an exception can be modified by the addition of affirmative coverage at the end of the exception or by an appropriate endorsement.

Underwriting Manual Subtopic

How To Insure Over

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Insuring over exceptions and other title risks is hazardous. Extreme care should be exercised prior to assuming the additional risk and in wording the clause affording the additional coverage. Although coverage must usually be tailored to suit every particular situation, there are certain general rules and guidelines to observe:

  • Language never to be used - Examples

    • The Company insures against the consequences of any attack.
    • The policy insures against any loss by reason of judgment shown at No. _____ above.
    • The Company insures the insured against all loss or damage as a result of said violation.
    • The Company insures against forced removal or attempted forced removal.
    • This policy insures against loss or damage arising out of an enforcement or attempted enforcement of the rights, if any.

  • Language to be used - Examples

    • In special circumstances, the following may be used: 
    • "The Company insures against loss or damage by reason of the enforcement or attempted enforcement of the lien excepted at No. _____ of Schedule B."

    • When insuring over an encroachment:

      "The Company hereby insures against loss or damage which the insured shall sustain by reason of the entry of any court order or judgment which constitutes a final determination and denies the right to maintain the existing improvements on the land because of the encroachment or encroachments thereof specifically set forth at exception number(s) _____ in Schedule B onto adjoining land."

      See Extended Coverage (5.32).