How a Title Attorney Reviews Title Insurance Claims

An earlier deed, inherited ownership interest, or easement may conflict with the estate insured under the policy. Coverage depends on whether the asserted interest involves an insured risk, rather than merely a property-related disagreement.

Contractual disputes unrelated to title generally fall outside this protection unless the policy covers the particular risk.

An owner's policy generally covers specified title risks existing on its effective date, even when the dispute arises years later.

A previously executed deed may become contested after purchase. The policy date, insured estate, and endorsements determine whether the underlying defect qualifies for coverage.

Schedule B commonly identifies excepted matters, including recorded easements and restrictions. General exclusions may address risks created or agreed to by the insured or arising after the policy date.

An exception for one recorded instrument does not necessarily exclude a separate interest. Coverage depends on the specific policy language and disputed facts.

A title search identifies recorded information but does not independently establish insurance coverage. Preliminary reports may also contain exceptions that differ from the issued policy.

An omitted record may raise a coverage question, but omission alone does not establish liability. Unlike pre-purchase real estate due diligence, a post-purchase claim depends on the insurance protection actually provided.

In Bartel v. Chicago Title Insurance Co. (2025), the California Court of Appeal found that the insurer owed a defense in an easement dispute based on potential coverage and the facts available when defense was requested.

The insurer could not disregard evidence supporting coverage while relying selectively on exclusions. The policy required a written defense request involving a third-party claim asserted in litigation.

The decision illustrates why policy wording and information available at the time of tender matter.

The duty to defend concerns legal representation in covered litigation, while indemnity addresses compensation for an insured loss.

Depending on the policy, the insurer may control the defense, resolve the title defect, or compensate the insured for a covered loss, subject to applicable limits. Reimbursement for independently incurred expenses may also be restricted.

In Bartel, the court rejected contractual defense-cost liability for a period without pending underlying litigation under the policy's terms.

Disagreements over these obligations may lead to separate insurance litigation.

An owner receiving a demand or lawsuit should review the policy's notice provisions. Where a written defense request is required, informal communication may not satisfy that condition.

Relevant records include:

• The issued policy, schedules, and endorsements.
• The claimant's demand, complaint, and disputed deeds.
• Recorded instruments identifying the asserted interest.
• Dated defense requests and insurer responses.

These documents help establish the asserted title defect, potential coverage, and the timing of the insurer's notice.

An incorrect coverage denial does not automatically constitute bad faith. In Bartel v. Chicago Title Insurance Co. (2025), the court found bad faith in the refusal to defend but upheld the denial of punitive damages.

California Code of Civil Procedure § 339(1) generally sets a two-year limitations period for title insurance policy claims, starting upon discovery of loss or damage. Under Lambert v. Commonwealth Land Title Insurance Co. (1991), a failure-to-defend claim accrues upon refusal of the defense tender, but the limitations period is tolled until final judgment in the underlying litigation. Other claims may follow different accrual or tolling rules, including a separate bad faith insurance claim.