Conditions & Claims: learn & quiz

The minute version

Give notice, promptly and in writing

The insured must notify the insurer promptly in writing of litigation or any matter that may be covered, and of any rejection of title as unmarketable.
Late notice doesn't automatically kill a claim. Under the 2021 form, liability is reduced only to the extent the insurer is prejudiced by the delay.
Send notice to the address in the policy's notice condition.

On written request, the insurer provides a defense in litigation where a third party asserts a covered claim, at its cost, with counsel it chooses. The insured must cooperate.
The insurer may also prosecute an action to establish title, pay the Amount of Insurance, settle, or cure the defect.
If the insurer removes the defect, cures the access or marketability problem in a reasonable manner (including through appeals), it has fully performed.

The insurer may require a signed proof of loss describing the matter and how loss is calculated. Under the 2021 form this is at the insurer's option, not only when it can't figure out the loss itself.

Owner's policy: the lesser of the Amount of Insurance or the difference in fair market value of title as insured versus subject to the defect.
Loan policy: generally capped by the Amount of Insurance and the outstanding Indebtedness, measured against the loss to the lender's security.
2021 owner's: value is measured as of the date the insured discovers the matter, with alternative dates if title was void at the Date of Policy or the insurer's cure attempt fails (when the amount also rises 15%).
Defense costs and attorneys' fees the insurer owes are paid in addition to the loss amount.

The 1992 ALTA owner's policy had a coinsurance clause: if insurance was under 80% of value, or later improvements raised value by 20%, partial losses were paid pro rata.
The 2006 owner's policy dropped coinsurance, and the 2021 form doesn't have it either. Insuring for full value still matters, because the Amount of Insurance caps recovery.

Payments reduce the Amount of Insurance (except costs and fees).
No voluntary settlements: the insurer isn't liable for liability the insured assumes in settling without written consent.
After paying, the insurer is subrogated to the insured's rights against others.
Arbitration is an optional (bracketed) condition in the 2021 ALTA policies. Where it's included: if the Amount of Insurance is $2,000,000 or less, either the insurer or the insured can elect binding arbitration. Above $2,000,000, it takes both to agree.