Of course you can compare rates but you will need more
information than just the premium rates to determine the relative
costs of closing and insuring a transaction. In many states the
title insurance premiums cover only the insurance element - the
amounts paid to the insurer (or "risk" rate) and the
amounts, if any, paid to the agent to prepare the policy and for
acquisition of the business. In those states, it is not uncommon
for there to be separate charges for abstracting and examination,
or for a title opinion and attorney's fees or closing charges and
escrow fees - all of which should be considered as a part of the
total costs of closing and insuring a transaction. Most of the
charges other than premium are not regulated in such states and,
therefore, are subject to negotiations which can frequently
result in lower relative costs on the big commercial (high
liability) transactions.
On the other hand, in Texas the promulgated premium rates compensate the title company for all those mandatory services necessary to issue the policy and those other services are included in "closing the transaction" as that term is defined by statute and regulation. In New Mexico, the promulgated all-inclusive rate does not include the cost of "closing the transaction" but does include the cost of determining that the estate to be insured has in fact been created. 30-A-I-c of the New Mexico General Rate Regulations states, "The premium rates established by these regulations include all premiums for title insurance, examination of the title or titles to be insured, determining that each insured estate has been created, conveyed or modified as shown in the policy, and determining what exceptions, if any, to insert in or delete from the policies to be issued as provided in these regulations." Traditionally, in New Mexico, a closing fee of $85 for the first $30,000 and $1 for each additional $1,000 in liability is charged in addition to the promulgated premium. The tradition in Texas is to charge both buyer and seller (or just borrower in a loan transaction) a flat escrow fee of between $25 and $75 (per side), or more, in addition to the promulgated, all-inclusive premium. In both states, these traditional closing or escrow fees are waived or reduced under certain limited circumstances.
Other factors to be considered when comparing title insurance costs from state to state (or city to city in states without statewide rates) are the costs, if any, for commitments (or binders) for title insurance, the costs of insuring the construction loan (in many states, construction loan policies are used), the total costs of an owner's policy and simultaneously issued loan policy, the cost of endorsements and extra hazardous risk premiums, if any, and reissue rates or credits. Generally, the premium rates in the non-promulgated states tend to be lower on the commercial (or higher liability) transactions and higher on the residential (or lower liability) transactions. In the promulgated rate states, the reverse competition influence exerted by persons controlling the commercial transactions and paying the premiums is reduced by virtue of the fixed rates set by the state and the rates are generally more favorable to homebuyers than in the other states.
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Last modified by EF on May 15, 2006