The responsibilities that title insurance companies assume in protecting lenders or homeowners against property ownership disputes make starting a title insurance company a long and involved process. In addition to general start-up tasks, such as writing a business plan, finding a location and securing start-up funding, you’ll need to complete additional steps that apply specifically to title insurance companies.
Research State Laws
Get information from your state’s Department of Insurance on title insurance agency laws that apply specifically to your state. Consult with an attorney to make sure you understand these rules and regulations. For example, many states have laws for naming your business. In general, naming laws disallow misleading or deceptive names, such as a name that implies your business is an insurance agency. In Utah, you must either include the words "Title Insurance Agency" in the business name or state that your business is a title insurance agency in communication and advertising materials. In Florida, you can’t include the term “Company” in your business name.
Address Risk Management
Protect your business from operational and financial risks by getting professional liability insurance, a fidelity bond and a surety bond that meets minimum state coverage requirements. Professional liability insurance -- also called errors and omissions insurance -- is similar to malpractice insurance in that it protects your business from a negligence claim, and most states require title insurance companies to have it. A fidelity bond protects you from losses due to employee misconduct, including fraud and embezzlement. A surety bond guarantees you have the financial resources to make required insurance payouts.
Apply for a Business License
All states have title insurance company operating licensing requirements. However, if your business plan includes more than one location, state laws determine whether each location needs a separate license or if the license for the home office covers branch offices. Make sure either you or the person you hire to manage the business is a licensed and appointed title agent or an attorney in good standing with the State Bar Association.
Hire the Right Employees
Recruit and hire employees with title insurance industry experience. Except for employees who perform strictly administrative tasks, such as a switchboard operator, receptionist or secretary, you’ll need licensed personnel. This includes underwriters and any employees who work directly with clients. If you decide to hire an unlicensed person, such as a new college graduate, most states provide a window of time for a new employee to get a state insurance license. For example, Florida allows 180 days. Create a continuing education plan to ensure -- and to document -- your employees meet state-mandated insurance license renewal requirements.
- Florida Division of Insurance Agent and Agency Services: Opening a Title Insurance Agency
- U.S. Small Business Administration: Fidelity and Surety Bonds: Do You Need Them in Your Business?
- Florida Department of State: Lawful Activity by Unlicensed Insurance Agency Personnel
- The District of Columbia Department of Insurance, Securities and Banking: Title Insurance
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