Amount of Title Insurance Policy Coverage (AYU Aug 2026)

Presented by Kay M. Creasman, Counsel

Problem: During June, we’ve had a number of different agents from across the state ask if they can sell a loan policy for less than the amount of the deed of trust, or issue an owner’s policy for coverage for less than the purchase price. For example, a $6,000,000 deed of trust but the lender only wants a $3,000,000 loan policy. In one commercial transaction, the purchaser wanted title policy coverage for $1,000,000 when the sales price was $3,000,000. In another case, an out-of-state attorney for the purchaser suggested they only get title insurance coverage in the amount of the loan, not the purchase price. Purchase price was $1,400,000 and loan amount was $800,000.

Q: Can we do that?

A: The short answer is “No.” The current Virginia Rate Manual (Dec. 14, 2024) (a copy is located in StarsLink) states at the top of the first page regarding Owner’s Policies “An owner's policy, insuring a fee simple estate, will not be issued for less than the full value of the premises. Similarly, a leasehold policy will not be issued for less than the value of the underlying lease, calculated as the aggregate of the rentals payable under the lease or the full value of the premises, whichever is less.”

The information about Standard Loan Policies states “A loan policy will not be issued for less than the amount secured indicated on the Deed of Trust, but may be issued for more—up to 125% of the principal debt to reimburse for interest, foreclosure costs, etc.”

In Virginia, if the “issue” is the title insurance premium remember that Va. Code § 38.2- 4608 allows individual agents to negotiate rates on a case by case basis as long as they are not discriminatory.

If you have a lender or owner with a request to issue a policy for less than the amount of the deed of trust or the purchase price contact VAUnderwriting@OldRepublicTitle.com.