Continuing with our Summaries of the ALTA Best Practices, I’d like to skip over the next two Pillars #4 (Settlement) and #5 (Title Production). I’ll return to them in the coming months. Those two Pillars are directly related to the service/product that you and we provide. I’d like to provide more detail and may have to break them down into segments. So, we now turn our attention to Pillar #6 related to E&O Insurance.
Pillar #6 is entitled “Malpractice, Errors & Omissions and Fidelity Coverage.” It requires Settlement Providers (and Title Agents) to maintain appropriate levels of insurance coverage. Per the policy, Attorneys/Agents must have written policies and procedures related to the procurement of E&O and, perhaps, Fidelity Insurance. These procedures should include a process by which the Firm’s requirements are reviewed and renewed annually.
Here is a sample policy drafted by the NC Best Practices Task Force:
“The Company maintains professional liability insurance in the amount of no less than $_______________. This amount is appropriate given the Company’s size and complexity and the nature and scope of its operations; the amount is not less than the amount agreed to in the Company’s Underwriting Agreement(s).
The insurance carrier is nationally known and has appropriate Best Ratings.
Coverages/Endorsements are reviewed annually and are added or subtracted to reflect current changes in practice in the practices of the industry and to reflect new threats to our business as they arise, such as cybercrime.”
I am in the process of soliciting quotes for CyberTheft Insurance as I type this. I’d suggest you talk to your E&O Carrier about the same.