Understanding Underwriting


If asked to define underwriting, the average person responds with an empty stare, a shoulder shrug, confused babbling, or a simple, “I don’t know.” Most people have no idea what underwriting is, a small percentage know it relates to insurance, and a few select experts can provide a longwinded, intimidating lecture. To avoid the need to ask, Rainier Title provides answers to some basic questions to help with your understanding of underwriting.

What Is Underwriting?

Lloyd’s of London is credited with coining the term, in the 17th century when risk-takers declared how much they were willing to risk in colonial ventures, and then wrote their name beneath that declaration. Since that time, underwriting has remained essentially the same. Underwriting is a means by which modern-day investors or risk takers evaluate whether loaning money or insuring an individual, business or property is worth the risk. Rainier Title Company focuses on a specific type of underwriting known as title insurance underwriting.

How Does Title Insurance Underwriting Work?

The main function of title insurance underwriting is to validate ownership of property. This process will include looking into deeds, wills, trusts, birth and marriage certificates, tax records and various other documents related to property ownership. Title insurance underwriting usually begins whenever you or your business, or an organization is in the process of purchasing a property. Rainier’s underwriters have two important objectives in mind throughout the title underwriting process.

Title Clearance

The first part of the process determines whether the current owner has clear, legal ownership of the property. Title clearance involves a title search into the history of the property and the various transfers of ownership that have occurred. Underwriters search for fraudulent property transfers, document forgeries, and look for any defects in the transfer history of the property that might cause issues in the future. A title underwriter determines whether there are alternate claims of ownership, tax liens or any other pending legal action on the property. The ultimate goal is to present a clear title, or a title without any defects, legal claims, or ownership disputes.

Title Protection

In addition to ensuring that a title is clear of any past legal claims or ownership disputes, title insurance underwriters protect property against future legal claims against the property. Common legal claims are tax liens, contractors’ liens in which a claim for payment exists, or a dispute against prior ownership that might arise. In good faith, most sellers purchase title insurance to assure the buyer that the property is clear of claims, and most buyers purchase title insurance to assure investors or lenders that there will be no future issues with the property into which they are risking capital.

What Is the Benefit of Title Insurance Underwriting?

Rainier Title’s underwriting process protects three different entities from ownership related legal actions as well as other legal disputes. It protects the existing owner or seller from legal claims that might arise during or after the process of transferring property. Underwriting protects the buyer from any future ownership or legal claims. Title insurance protects lenders or investors against loss of their investment due to ownership claims or legal actions which might threaten their return on investment.

How Long Does Title Insurance Underwriting Take?

A title search conducted by Rainier Title can be accomplished within a few hours, or it might take up to two weeks to complete. The length of time required depends upon a variety of different factors that might include:

  • Number of Transactions or Title Transfers
  • Past Tax or Other Property Liens
  • Ownership Questions or Disputes

Properties that require a deeper examination of these items will take longer to complete, where those with fewer or no items in each of these areas take much less time.

The closing process of a property purchase can be intimidating. One part of the process that often contributes to dragging out the process is title insurance underwriting, but because knowing that the title of a property is clear of any legal claims against it, it is certainly worth the wait. Rainier Title appreciates the work of underwriters and the risk-assurance they provide to buyers, sellers and lenders. Contact us to learn more about title insurance underwriting provided by Rainier Title when buying or selling a property.

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