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Consumer Financial Protection Bureau
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ALTA Best Practice #6 – Errors & Omissions and Fidelity Coverage

Best Practice 6 – Errors & Omissions and Fidelity Coverage. Appropriate levels of professional liability ensure that title agencies and settlement companies have the financial capacity to stand behind their professional services.

Purpose: Appropriate levels of professional liability (errors and omissions insurance) ensure that title agencies and settlement companies have the financial capacity to stand behind their professional services. In addition, state law and contractual obligations may require a company to maintain fidelity bond and surety bond policies with prescribed minimum amounts of coverage.

Professional Liability and Fidelity Coverage Policy

  1. Professional liability or errors and omissions insurance

    The company maintains professional liability insurance in the amount of no less than $2,000,00.00. 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 the practices of the industry and to reflect new threats to our business as they arise, such as cybercrime.

  2. Fidelity bond coverage (Protection for Agent against employee dishonesty)

    The company maintains a fidelity bond policy in an amount of not less than $100,00.00. The company reviews both State law and our Issuing Agency Contracts to verify that our coverage meets or exceeds their respective requirements. This coverage is carried even if State law or our Issuing Agency Contract do not require it from time-to-time as conditions or laws change.

  3. Surety coverage, Closing Protection Letters (Protection for consumers against closing disbursement issues)

    (Alternate A) In Texas, state law requires us to offer closing protection coverage to buyers, sellers, and lenders. We encourage buyers, sellers, and lenders to purchase those products and maintain a signed disclosure form in our files evidencing our compliance with state law in connection with those.

    (Alternate B) Alternatively, the company ensures that the Closing Protection Letter coverage, where mandated by statute, is issued in connection with the disbursement or that a statutory indemnity fund is established to cover fidelity losses not otherwise covered by the protections afforded by the underwriter.

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