Title Insurance Policies, Endorsements, and Covered Risks
Anatomy of the policy
The modern owner's policy has four parts: Covered Risks, Exclusions, Conditions, and Schedules. Covered Risks typically include title vesting in someone other than the insured, defects in or liens and encumbrances on title, unmarketability, lack of a right of access, and certain post-policy risks such as someone else claiming title by adverse possession or a later recorded document that would have been covered if recorded earlier. The five Exclusions address governmental police power and zoning, creditors' rights and bankruptcy, eminent domain, government forfeiture and escheat, and (in the owner's policy) the insured's own acts and certain limitations on the insured's occupancy. Conditions define who is an insured, continuity of coverage, the duty to defend, notice and proof of loss, subrogation, and how much the insurer pays.
Schedules
Schedule A identifies the date of policy, insured, estate, record title, and amount. Schedule B-I lists requirements to be satisfied before the policy issues (payoffs, releases, curative deeds). Schedule B-II lists exceptions the policy will not insure (easements, CC&Rs, mineral reservations, survey matters).
Endorsements
Endorsements add or modify coverage and must be requested and issued - they do not apply automatically. Common ones include condominium, planned-unit-development, variable-rate and negative-amortization (for lenders), environmental protection lien, restrictions/encroachments/minerals, assignment, mortgage modification, future advances, non-imputation, access and entry, location, same-as-survey, subdivision, and easement endorsements.
Traps and rule of thumb
Questions test whether a buyer has survey or access coverage by default (they do not), and whether one policy protects the other party (it does not). Rule of thumb: B-I is what must be fixed before I insure; B-II is what I insure around.