To many home buyers, title insurance rates are a “black box” in that most don’t fully understand how title insurance rates are set.
In this post, we’ll try to shed some light on how title insurance rates are calculated, and how it differs between states.
Three primary methods to calculating title insurance rates
There are three different ways title insurance rates are calculated. This is often determined by state regulation (or lack thereof).
- Method 1: Filed Rate
- Method 2: Not Filed Rate
- Method 3: Promulgated rate (This post)
In this post, we’ll discuss the 3rd method – promulgated rates and which states use this method.
What is a promulgated rate?
In short, a promulgated rate state is a state that has its title insurance rates set by state regulation. In short, this means that the rates are state law and cannot be modified between title agents or attorneys.
However, the only fee that is regulated is the actual cost of the title insurance, not the other fees set by the agent or attorney.
For example, you might see other fees on your ALTA Settlement Statement such as an “Attorney Fee” or “Search Fee.” These fees are perfectly normal and are just for the different services that the closing agent offers to ensure the property you are purchasing is legally able to be transferred in your name.
What states have promulgated title insurance rates?
At the time of this writing there are only 3 states that have promulgated rates. They are as follows:
- Florida
- Texas
- New Mexico