How to Save Some Money on Your Title Insurance Policy

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  • The Texas Department of Insurance sets up the cost of title insurance and any reductions that may apply.
  • Texas Rate Rule 5 and 3 can combine to provide a commercial real estate investor a significant discount when it improves a property.
  • Because there are so many of these potential reductions available, its important to have a title fee attorney who understands your business and which reductions may apply.

If you are reading this blog, I probably do not have to tell you that commercial real estate is booming in Texas. Obviously the recent uncertainty and rise in interest rates have caused some to be a little apprehensive. But for the most part, the market is very good.

As a result, we have been doing a lot of closings lately – both as a title fee attorney and representing the buyer. And while doing it, an issue came up that I think makes a good topic for this blog. I wrote a few weeks ago about how title insurance is both necessary and expensive. Well there are ways to reduce the cost if certain factors are met.

This week, I am writing about one of those potential discounts that you should definitely be aware of if you are renovating or developing on your property. It can be a great benefit to keeping costs down.

Rate Rule 5 can Limit Construction Costs


I have mentioned this before, but Texas title insurance costs are set by the Texas Department of Insurance. The costs and discounts are all explained in the rate rules that TDI sets up. Part of one of those – Rate Rule 5 – is pretty well known.

The part you likely know of Rate Rule 5 (“R-5”) is the simultaneous issue. It means that if you are purchasing an owner policy and a lender policy on the same property at the same time, you can get the lender policy priced as a simultaneous issue. And this only costs an additional $100 over the cost of the owner policy. Any endorsements to the lender policy are, of course, an additional cost.

But there is another part of R-5 that you may not be familiar with. If you have an Owner policy and are now planning to improve the property and, thus, increase the amount of the title policy, then:

  • The premium for the new Owner’s Policy must be reduced by a credit as provided in Rate Rule 3, if the new policy:
    • Covers the identical property covered by the existing policy;
    • Is dated within four years of the existing policy; and
    • Includes some exception and liability language prescribed by TDI.

Rate Rule 3 states that when an improvement is added to the property, the cost of the title policy will be the total base rate with the improvement less the cost of the surrendered policy.

So What does this all mean?


Sometimes the easiest way to see what the words mean is to see them in action. Lets assume that, in 2020, you bought a property for $10 million and the title policy base rate for that was $40,750. And then, you make improvements to the property worth an additional $30 million so that you now need a title policy worth $40 million total.

The cost of that new policy would be $106,795. But if the improvements are done within four years of the purchase of the original policy, then you are credited the amount of the original policy. So your total cost would be $106,795 less $40,750, or $66,045.

I have written now about a few of these title policy refunds. Its important because there are a lot of them. TDI sets out thirty-six different rate rules that can potentially reduce the cost of your policy. Its so important, therefore, to have a title fee attorney that understands your business and what exceptions may apply. At Bukowski Law Firm, that’s what we strive to do for our clients.

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