Construction deficiency claims and title insurance being two of my primary areas of practice and both being near and dear to my heart, I read Mike Holmes’ article “A flood of misinformation: Title insurance is not a home warranty” in the National Post with some interest.
I don’t agree with everything that Holmes says in the article but he got the title right anyway. Title insurance is a specialized insurance product and, as a very general statement, protects purchasers of real property from a long list of “title” or “ownership” related problems or “risks”. It is not, and doesn’t pretend to be, a warranty of good design and/or construction. The title of the article seems to suggest that Holmes agrees with this proposition. So far, so good.
Where Holmes really loses me, though, is when, in discussing hypothetical homeowners who discover major construction deficiencies, he writes, “Who’s at fault? Is it the homeowner who got the renovation? Is it the contractor that was hired? Is it the title insurance company, the building inspector or the government? As far as I’m concerned, it’s all of the above.” How can the title insurer be at fault?
A policy of insurance (be it title insurance or some other kind of insurance coverage) covers what it covers and doesn’t cover what it doesn’t cover. For Holmes to suggest, as he does, that the title insurer is at fault in the scenario he outlined is a bit like saying that when your house gets broken into and your auto insurer won’t pay for your stolen sofa, your auto insurer is partly at fault for your loss.
In any case – I thought the article was worth mentioning as Homes has brought some good media exposure to title insurance and cast at least a little bit of light on a common misunderstanding that I see all too often in my practice.