New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on September 20, 2002, representing the position of the New York State Insurance Department.

Re: Agents for title insurance

Question Presented:

1. Must an employee or representative of a title insurance company be licensed as an agent in order to sell title insurance on behalf of a title insurance corporation?

2. If not, are such duties regulated or would such person be subject to other licensing requirements?

Conclusion:

1. No. An employee or representative of the title insurer is not required to be licensed as an agent of a title insurance corporation in order to sell title insurance issued by a title insurance corporation.

2. Whether or not a license is required depends on the duties performed by the seller of title insurance. If the employee or representative of a title insurer not only engaged in the sale of title insurance on behalf of the title insurance company but also guaranteed the correctness of the title search, this would be considered doing an insurance business and would be subject to the licensing requirements for a title insurance corporation under the Insurance Law.

Facts:

An inquirer asked whether an individual who sells title insurance in New York on behalf of a licensed title insurance company needs to be licensed as an agent. No other facts are presented.

Analysis:

1. N.Y. Ins. Law § 2101(a)(4) (McKinney 2000) excludes "any agent or other representative of any title insurance company" from the definition of "insurance agent" contained in N. Y. Ins. Law § 2101(a)(1) and used in Article 21. Thus, such a representative selling title insurance issued by the title insurance corporation would not need to be licensed as an insurance agent and would not be considered acting "as an insurance agent" without a license under N. Y. Ins. Law § 2102(a)(1) (McKinney 2000).

Further, N.Y. Ins. Law § 2115(a) (McKinney Supp. 2002), which prohibits an insurer or its agent doing business in New York from paying a commission or compensation to anyone acting as an insurance agent except to a licensed insurance agent of such insurer or certain qualified person is specifically inapplicable to a title insurance corporation or its agent or representative pursuant to N.Y. Ins. Law § 2115(b) (McKinney Supp. 2002).

2. N.Y. Ins. Law Article 64 (McKinney 2000) sets forth the definition, organization, powers, and other legal provisions relating to title insurance corporations. Title insurance is defined in N.Y. Ins. Law

§ 1113(a)(18) (McKinney Supp. 2002) as:

insuring owners of, and other persons lawfully interested in, real property and chattels real against loss by reason of defective titles and encumbrances and insuring the correctness of searches for all instruments, liens or charges affecting title to such property, including power to procure and furnish information relative thereto, and such other incidental powers as specifically granted in this chapter.

"‘Title insurance policy’ means any policy or contract insuring or guaranteeing the owners of real property and chattels real and other persons interested therein, or having liens thereon, against loss by reason of encumbrances thereon and defective titles." N.Y. Ins. Law § 6401(b) (McKinney 2000).

Among the powers of a title insurance corporation is "[t]o make and to guarantee the correctness of searches for all instruments affecting titles to real property, chattels real, and cooperative units and proprietary leases, and for all liens or charges affecting the same." N.Y. Ins. Law § 6403(b)(1) (McKinney 2000). It is the title insurer that guarantees the correctness of a search.

Therefore, if an employee or representative of a title insurance corporation were to guarantee the correctness of the search, such person would be exercising a power of a title insurance corporation which would be subject to the licensing requirements for a title insurance corporation under the Insurance Law. However, there is no prohibition against such person making, issuing, or furnishing an abstract, search, examination, survey, or certificate of title without guarantee or insurance thereof. N.Y. Ins. Law § 6408(a) (McKinney 2000).

In conclusion, an agent for a title insurance corporation engaged in the sale of title insurance is not required to be licensed as an insurance agent.

For further information you may contact Associate Attorney Jeffrey Stonehill at the New York City Office.