What to Do When Your Florida Title Insurance Company Denies a Claim
If your title insurance company denies a claim in Florida, you must first review the 'Schedule B' exceptions in your policy. If the denial is wrongful, you can file a Civil Remedy Notice to demand coverage or sue the insurer for Bad Faith and breach of contract.
Purchasing title insurance is supposed to be your ultimate safety net when buying real estate. It protects you from past defects, forged deeds, unknown heirs, and unrecorded liens. However, what happens when a long-lost heir shows up, or the city claims an easement through your living room, and your title insurance underwriter completely denies your claim? Dealing with a powerful insurance company can be intimidating. Finding an aggressive real estate litigation lawyer in our US Lawyers Directory is vital to force the insurer to honor their contractual obligations.
Title insurers are highly regulated in the state. The rules governing how they operate, the rates they charge, and how they handle claims are overseen by the Florida Office of Insurance Regulation, Tallahassee, and statutes like Fla. Stat. § 627.784. When an insurer denies a claim, they usually rely on fine print and specific exclusions. Understanding how to fight these exclusions is the key to protecting your property rights.
Common Reasons for Claim Denials
Insurers do not deny claims arbitrarily; they point to specific clauses in the ALTA (American Land Title Association) standard policy. Here are the micro-niches where disputes most frequently arise.
Fighting 'Schedule B' Exceptions
Every title policy contains "Schedule B - Exceptions from Coverage." This section lists specific items that the insurer found during their title search and refuses to cover, such as a known utility easement or an old HOA restriction. Denials often occur when an insurer tries to stretch a vague Schedule B exception to cover a newly discovered defect. Your attorney will heavily scrutinize the exact wording of Schedule B to prove that the new issue was not explicitly excluded.
Unrecorded Easements Discovered Post-Closing
Sometimes, a neighbor or a utility company claims they have a legal right to cross your property based on an unrecorded agreement or "prescriptive easement" (long-term use). Because these are not in the public records, the title company might deny the claim, citing the standard exception for items "not shown by the public records." Defeating this denial requires proving that a proper physical survey should have uncovered the issue, or that the defect actually was recorded but the title examiner simply missed it.
The Insurer's 'Duty to Defend'
A title policy provides two main benefits: the duty to indemnify (pay you for your financial loss) and the duty to defend (hire lawyers to fight third-party claims against your title). Insurers sometimes deny the duty to defend by claiming the third-party lawsuit falls outside the policy scope. Precedents like Jones v. Florida Insurance Guaranty Ass'n, Inc., 908 So. 2d 435 (FL Supreme Court 2005) establish that the duty to defend is broader than the duty to indemnify. If even one allegation in a lawsuit against you touches on covered title defects, the insurer is legally obligated to pay for your legal defense.
Step-by-Step Action Plan for Property Owners
If you receive a formal denial letter from your title underwriter, you must escalate the matter formally.
Step 1: Reviewing Owner's vs. Lender's Policies
First, ensure you are looking at the correct policy. When you bought the house, you likely paid for a Lender's Policy (which protects the bank) and an Owner's Policy (which protects you). The insurance company only owes a duty to you under the Owner's Policy. Your attorney will review this policy alongside the original closing documents.
Step 2: Issuing a Civil Remedy Notice (CRN)
If the denial is wrongful, Florida law requires you to give the insurance company a chance to fix their mistake before suing them. Under Fla. Stat. § 624.155, your attorney will file a Civil Remedy Notice of Insurer Violations with the Florida Department of Financial Services. The insurer then has a strict 60-day window to cure the breach (by either paying the claim or defending you) before you can sue them for Bad Faith.
Step 3: Suing for Breach of Contract and Bad Faith
If the 60 days pass without a cure, your attorney will file a civil lawsuit in a court like the Palm Beach County Circuit Court, West Palm Beach or the Pinellas County Circuit Court, Clearwater. The lawsuit will typically use Form 1.997, Florida, Supreme Court, Civil Cover Sheet and allege breach of contract. Furthermore, a Bad Faith claim allows you to seek damages above and beyond the policy limits, punishing the insurer for unfairly handling your claim.
Costs of Suing a Title Insurance Company
Fighting a major insurance underwriter requires substantial legal firepower, but Florida law provides a significant advantage for policyholders.
| Expense | Estimated Average Cost (USD) |
|---|---|
| Attorney Retainer | $5,000 - $10,000 (Often billed hourly) |
| Court Filing Fees | $400 - $410 |
| Expert Title Examiner Witnesses | $2,000 - $5,000 |
| Attorney Fee Recovery | Generally not recoverable (narrow exceptions apply) |
Under Florida law, following the repeal of the state's one-way attorney fee statute, each party generally pays their own legal fees under the American Rule. However, policyholders may still recover attorney fees in narrow circumstances, such as prevailing in a declaratory relief action after a total coverage denial under Fla. Stat. § 86.121, succeeding in a statutory bad faith action under Fla. Stat. § 624.155, or serving a valid proposal for settlement under Fla. Stat. § 768.79.
Timelines for Resolving Title Claim Denials
The timeline heavily depends on the insurer's response to the Civil Remedy Notice. The initial review and filing of the CRN take a few weeks. Then, the mandatory 60-day waiting period applies. If the insurer reverses their denial, the issue can be resolved in under 3 months. If they double down and force you into litigation, a breach of contract and bad faith lawsuit can take 1 to 2 years to reach a jury trial or final settlement.
Frequently Asked Questions (FAQ)
What is the difference between title insurance and homeowner's insurance?
Homeowner's insurance covers future physical risks (like fire, hurricanes, or theft). Title insurance covers past legal defects (like forged deeds or old liens) that existed before you bought the property but were discovered later.
Can the title company just refund my premium instead of paying the claim?
No. Once the policy is issued, the insurer cannot simply refund your initial premium to escape liability. They must either fix the title defect, pay for your financial loss up to the policy limit, or legally defend your title.
Do I have to use the lawyer the title insurance company assigns to me?
If the insurer accepts coverage and provides a defense, they generally have the right to select the attorney. However, if they issue a "Reservation of Rights" letter (meaning they might deny coverage later), you may have the right to select your own independent counsel at their expense.
Will my title policy cover property boundary line disputes with neighbors?
It depends. If your policy includes a specific exception for "matters that would be disclosed by an accurate survey," and you did not get a survey at closing, boundary disputes are generally denied. If you did get a survey and the exception was removed, you should be covered.
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