As a title agent in Ohio, we write title insurance that is backed by the financial capabilities of our underwriters. We are not an agent for these underwriters when we perform escrow closings. The Closing Protection Coverage extends our agency relationship to our underwriter to cover our acts as the escrow agent on the transaction. For years, this protection was offered to lenders for no cost and typically buyers and sellers were not offered the coverage on residential transactions.

Due to a series of title agent's defalcations involving escrow fraud, buyers and sellers were caught without any coverage and suffered financial losses. This in turn caused the State of Ohio to react. In 2007, the State of Ohio enacted the current law in an effort to protect buyers and sellers, as well as lenders, from the negligent or fraudulent acts of the title agents when they perform escrow services.

As a title agent doing business in Ohio, we are required by law to offer all of the parties involved in a real estate closing Closing Protection Coverage when title insurance is being issued in the form of a closing protection letter mandated by the Ohio Department of Insurance. Basically, the Closing Protection Coverage indemnifies the covered parties for the agent's theft, misappropriation, fraud or any other failure to properly disburse funds, and failure to comply with written closing instructions when agreed to by the agent. We forward the required documents to our buyers and sellers, which gives the buyer and seller the option to choose to purchase the coverage or not. We field a number of questions about this coverage and the reasons why individuals should or should not purchase the coverage.

Explaining to the consumer why they should purchase the coverage, which in turn protects them from the agent's misfeasance, is awkward. The reason to purchase the insurance is to protect the consumer, whether it is the seller, buyer or lender. Virtually every lender will require the borrower to purchase the coverage that protects the lender (cost is $35.00); if the borrower chooses to be protected it is only an additional $15.00. From the sellers perspective, the cost of the coverage is an additional $50.00. This is a small price to pay in comparison to the value of your home or mortgage. The coverage puts the underwriter on the hook for the agent's actions. It is always in the consumers best interest to cover any possible scenarios of negligence and fraud, especially when the fee is so nominal.

**Just a note, the title agent (specifically in our case, NorthStar Title) does not receive any portion of the Closing Protection Fees, all of those fees/charges go directly to our title insurance underwriters.