Va. Code Ann. tit. 38.2, ch. 46

Va. Code Ann. tit. 38.2, ch. 46
in effect

Va. Code Ann. § 38.2-4600 Class of insurance and insurance companies to which chapter applies

Except as otherwise provided, this chapter applies to title insurance as defined in § 38.2-123 , and to title insurance companies as defined in § 38.2-4601 . 1952, c. 317, § 38.1-720; 1986, c. 562.

Va. Code Ann. § 38.2-4601 Title insurance company defined

"Title insurance company" means any company licensed to transact, or transacting, title insurance. 1952, c. 317, § 38.1-721; 1986, c. 562.

Va. Code Ann. § 38.2-4601.1 Title insurance agency or agent defined

A "title insurance agency or agent" means any individual or business entity licensed in the Commonwealth, pursuant to Chapter 18 (§ 38.2-1800 et seq.) of this title, as a title insurance agent and appointed by a title insurance company licensed in the Commonwealth, who shall perform all of the following services (for which liability arises) relevant to the issuance of title insurance policies, subject to the underwriting directives and guidelines of the agent's title insurance company. These services shall include (i) the evaluation of the title search to determine the insurability of the title; (ii) a determination of whether or not underwriting objections have been cleared; (iii) the actual issuance of a title commitment or binder and endorsements; and (iv) the actual issuance of the policy or policies and endorsements on behalf of the title insurance company. A title insurance agent holding any funds in escrow shall promptly deposit such funds in a trust account in a financial institution licensed to do business in this Commonwealth. Such trust account shall be separate from all other accounts held by the agent. 1993, c. 147; 1997, c. 426 ; 2001, c. 706 .

Va. Code Ann. § 38.2-4602 What laws applicable

Except as otherwise provided, and except where the context otherwise requires, all provisions of this title relating to insurance and insurers generally shall apply to title insurance and title insurance companies. Code 1950, §§ 38-234, 38-235; 1952, c. 317, § 38.1-722; 1986, c. 562.

Va. Code Ann. § 38.2-4603 What companies may transact title insurance

No company other than an insurance company organized as a stock company and licensed to transact title insurance shall transact title insurance in this Commonwealth. 1952, c. 317, § 38.1-723; 1986, c. 562.

Va. Code Ann. § 38.2-4604 Investment in plant and equipment

Notwithstanding the provisions of Chapter 14 of this title, any domestic title insurance company may invest in title records and equipment; however, the reporting of all such amounts as an admitted asset shall be subject to the valuation restrictions as provided for in the National Association of Insurance Commissioners accounting practices and procedures manuals. Code 1950, § 38-236; 1952, c. 317, § 38.1-724; 1983, c. 457; 1986, c. 562; 2000, c. 46 .

Va. Code Ann. § 38.2-4605 Interim binders

Binders or other temporary insurance contracts may be made and used pending the issuance of a title insurance policy. 1952, c. 317, § 38.1-725; 1986, c. 562.

Va. Code Ann. § 38.2-4606 Forms to be filed with Commission

All forms of title insurance policies and interim binders that are customarily used by any title insurance company in connection with the insurance of titles to property located in this Commonwealth shall be filed with the Commission. 1952, c. 317, § 38.1-726; 1986, c. 562.

Va. Code Ann. § 38.2-4607 Maximum risk

On and after July 1, 1952, no company transacting title insurance in this Commonwealth shall assume a single risk in an amount in excess of fifty percent of the aggregate amount of its total capital and surplus and its reserves other than its loss or claim reserves. As used in this section, "a single risk" means the risk or hazard attaching to or arising in connection with any one piece or parcel of property, whether or not the policy insures other property. Any risk, or portion of any risk, that has been reinsured as authorized in this title shall be deducted in determining the limitation of risk prescribed in this section. Code 1950, § 38-167; 1952, c. 317, § 38.1-727; 1986, c. 562.

Va. Code Ann. § 38.2-4608 Title insurance rates

A. Title insurance risk rates shall be reasonable and adequate for the class of risks to which they apply. Risk rates shall not be unfairly discriminatory between risks involving essentially the same hazards and expense elements. The rates may be fixed in an amount sufficient to furnish a reasonable margin for profit after provision for (i) probable losses as indicated by experience within and without this Commonwealth, (ii) exposure to loss under policies, (iii) allocations to reserves, (iv) costs of participating insurance, (v) operating costs, and (vi) other items of expense fairly attributable to the operation of a title insurance business. B. Policies may be grouped into classes for the establishment of rates. A title insurance policy that is unusually hazardous to the title insurance company because of an alleged defect or irregularity in the title insured or because of uncertainty regarding the proper interpretation or application of the law involved, may be classified separately according to the facts of each case. C. Title insurance risk rates shall not include charges for abstracting, record searching, certificates regarding the record title, escrow services, closing services, and other related services that may be offered or furnished, or the cost and expenses of examinations of titles. D. Any title insurance company may issue, publish and use price schedules for title insurance and for any separate or related services, or schedules setting forth one price covering the risk rate and the charges for any separate or related services. E. A title insurance company or title insurance agent may charge risk rates that it negotiates with any potential insured. Such negotiated rates shall be presumed not to be unfairly discriminatory and not to violate § 38.2-509 if such rates comply in all other respects with subsection A. 1952, c. 317, § 38.1-728; 1986, c. 562; 2005, c. 848 .

Va. Code Ann. § 38.2-4609 Loss or claim reserves

Each title insurance company licensed in this Commonwealth shall maintain loss and loss adjustment expense reserves in an amount estimated in the aggregate as being sufficient to provide for the payment of all unpaid losses and claims under title insurance contracts of which the company has received written notice from or on behalf of the insured. 1952, c. 317, § 38.1-729; 1986, c. 562; 1990, c. 334.

Va. Code Ann. § 38.2-4610.1 Unearned premium reserve

A. A domestic title insurance company shall establish and maintain an unearned premium reserve computed in accordance with this section, and all sums attributed to such reserve shall at all times and for all purposes be considered and constitute unearned portions of the original premiums. This reserve shall be reported as a liability of the title insurance company in its financial statements. B. The unearned premium reserve shall be maintained by the title insurance company for the protection of holders of title insurance policies. Except as provided in this section, assets equal in value to the unearned premium reserve are not subject to distribution among creditors or stockholders of the title insurance company until all claims of policyholders or claims under reinsurance contracts have been paid in full, and all liability on the policies or reinsurance contracts has been paid in full and discharged or lawfully reinsured. C. Except as provided in § 38.2-4610.1:1 , foreign or alien title insurance company licensed to transact title insurance business in the Commonwealth shall maintain at least the same unearned premium reserves on title insurance policies issued on properties located in the Commonwealth as are required of domestic title insurance companies, unless the laws of the jurisdiction of domicile of the foreign or alien title insurance company require a higher amount. D. The unearned premium reserve shall consist of: 1. The amount of the unearned premium reserve on June 30, 1986; and 2. A sum equal to $1.50 for each policy, contract or agreement of title insurance covering a single risk written after June 30, 1986, plus a sum equal to 12 1/2 cents of each $1,000 of net retained liability under each such policy, contract or agreement of title insurance on a single risk written after June 30, 1986. E. Amounts placed in the unearned premium reserve in any year in accordance with subdivision 2 of subsection D of this section shall be deducted in determining the net profit of the title insurance company for that year. F. A title insurance company shall release from the unearned premium reserve a sum equal to ten percent of the amount added to the reserve during a calendar year on July 1 of each of the five years following the year in which the sum was added, and shall release from the unearned premium reserve a sum equal to 3 1/3 percent of the amount added to the reserve during that year on each succeeding July 1 until the entire amount for that year has been released. The amount of the unearned premium reserve maintained before July 1, 1986, shall be released in accordance with the law in effect when the respective sums were reserved. 1986, c. 404, § 38.1-730.1; 2008, c. 248 .

Va. Code Ann. § 38.2-4610.1:1 Unearned premium reserves of foreign title insurance companies

A foreign title insurance company licensed to transact business in the Commonwealth shall be permitted to establish and maintain an unearned premium reserve on title insurance policies issued on properties located in the Commonwealth pursuant to the reserving laws of that foreign title insurance company's domiciliary regulator so long as the domiciliary regulator is accredited under the National Association of Insurance Commissioner's Financial Regulation Standards and Accreditation Program. 2008, c. 248 .

Va. Code Ann. § 38.2-4610.2 Loss reserves

A. Each title insurance company licensed in this Commonwealth shall annually evaluate the adequacy of its total recorded loss reserves. Total recorded loss reserves are the sum of claim reserves held under § 38.2-4609 and unearned premium reserves held under § 38.2-4610.1 . The evaluation of reserve adequacy shall be prepared by a qualified actuary and shall be based on a comparison of total recorded reserves to a projection of ultimate losses not yet paid. The actuary shall certify the results of his evaluation in a report complying with such applicable title insurance annual statement instructions as may be issued by the National Association of Insurance Commissioners. B. A domestic title insurance company shall record an additional reserve to the extent the projection of ultimate losses not yet paid set forth in the report of the qualified actuary exceeds total recorded loss reserves held by the company. For purposes of calculating any additional reserve required, a domestic title insurance company may discount the projection of ultimate losses not yet paid to reflect the time value of money. The interest rate used by the actuary to reflect the time value of money shall be based on a portfolio interest rate approach with appropriate provision for risk margins and subject to published actuarial standards for discounting reserves. C. A foreign or alien title insurance company licensed in this Commonwealth shall record an additional reserve to the extent the projection of ultimate losses set forth in the report of the qualified actuary exceeds all recorded reserves held by the company as reported in its most recent statutory statement filed with the Commission, including reserves held under subsection C of § 38.2-4610.1 and all reserves held under the laws of the jurisdiction of the domicile of the foreign or alien title insurance company or any other jurisdiction. 1996, c. 494 .

Va. Code Ann. § 38.2-4613 Unearned premium reserve to be held and administered for benefit of policyholders

A. The reserve required under § 38.2-4610.1 shall be for the security of policyholders of the title insurance company as provided in this section. B. If an order of rehabilitation or liquidation of any title insurance company is entered by a court of competent jurisdiction, the rehabilitator or receiver, with the approval of the court, or the Commission if it has been directed to rehabilitate or liquidate the title insurance company under the provisions of Chapter 15 of this title, may (i) use assets equal to the unearned premium reserve to pay any claims for losses sustained by policyholders prior to the time reinsurance is effected to the extent that those losses are in excess of the loss or claim reserves available for their payment, (ii) enter into contracts for the reinsurance of the obligations under the outstanding title insurance policies of the company in accordance with their terms and conditions, and (iii) use assets equal to the unearned premium reserve to pay the cost of reinsurance. After the payments authorized by this subsection have been made, assets equal to any balance in the unearned premium reserve shall become general assets of the company. C. If no such contract of reinsurance is effected, assets equal to the unearned premium reserve may be applied by the rehabilitator or receiver with the approval of the court, or by the Commission, in the following order of preference: (i) all expenses incurred under this section in connection with the receivership or rehabilitation proceedings, (ii) all allowed and unpaid claims for losses sustained by policyholders pending at the time fixed by the court or the Commission for the filing of claims, and (iii) all allowed claims for losses asserted within twenty years from the date of the entry of the order of rehabilitation or liquidation, which claims shall be paid in the order of the date of their allowance by the court or the Commission. Assets equal to any balance in the unearned premium reserve after payment of all allowed claims shall become general assets of the company. All title records that the rehabilitator, or the receiver, or the Commission if appointed to rehabilitate or liquidate the company, deems necessary to carry out the provisions of this section shall be preserved for twenty years. D. In proceedings for the rehabilitation or liquidation of a title insurance company that has not been declared insolvent, no assets of the company shall be distributed to its stockholders until all claims allowed in the proceedings have been paid in full. If the proposed distribution is within twenty years from the date of the entry of the order of rehabilitation or liquidation, the distribution may be made if general assets of the title insurance company sufficient to fund the unearned premium reserve to the required amount as of the date of the entry of such order are first transferred to the unearned premium reserve. Upon the expiration of twenty years from the date of the order, assets equal to any balance in the unearned premium reserve after payment of all allowed claims asserted within the twenty-year period shall become general assets of the company. 1952, c. 317, § 38.1-733; 1986, cc. 404, 562.

Va. Code Ann. § 38.2-4614 Prohibition against payment or receipt of title insurance kickbacks, rebates, commissions and other payments; penalty

A. 1. No person selling real property, or performing services as a real estate agent, attorney, or lender incident to any real estate settlement or sale, shall pay or receive, directly or indirectly, any kickback, rebate, commission, thing of value or other payment pursuant to any agreement or understanding, oral or otherwise, that business incident to the issuance of any title insurance be referred to any title insurance company, title insurance agency or agent. No title insurance company, title insurance agency or agent shall give any such kickback, rebate, commission, thing of value or other payment pursuant to any such agreement or understanding. For purposes of this section, "thing of value" means any payment, advance, funds, loan, service or other consideration. This section shall not prevent any federally insured lenders, holding companies to which they belong, or subsidiaries of such lenders or holding companies from being licensed by the Commission as title insurance agents or agencies and receiving commissions from the sale of the title insurance policies in their capacities as title insurance agents or agencies. 2. Nothing in this section shall be construed to prohibit (i) payments of sums spent for bona fide advertising and marketing promotions otherwise permissible under the provisions of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. or (ii) providing educational materials or classes, wherein such materials or classes are provided to a group of persons or entities pursuant to a bona fide marketing or educational effort. B. Any person who knowingly and willfully violates this section shall be guilty of a misdemeanor and subject to a fine of not more than $1,000 for each violation. Any criminal charge brought under this section shall be by indictment pursuant to Chapter 14 (§ 19.2-216 et seq.) of Title 19.2. C. No person shall be in violation of this section solely by reason of ownership in a title insurance company, title insurance agency or agent as defined in this chapter, wherein such person receives returns on investments arising from the ownership interest. In addition, this section shall not prohibit (i) the payment to any person of a bona fide salary or compensation or other payment for services actually performed for the business of the title insurance company, title insurance agency or agent or (ii) any employer's payment to its own bona fide employees for referrals. Any employer's payment to its own employees for the referral of title insurance business shall be subject to the requirements of subdivision B 8 of § 38.2-1821.1 . 1975, c. 184, § 38.1-733.1; 1986, c. 562; 1987, c. 174; 1993, c. 147; 1996, c. 883 ; 2002, c. 599 .

Va. Code Ann. § 38.2-4615 Exchange of information

A. In order to further more equitable adoption, use and adjustment of risk rates and premiums and forms of temporary insurance policies and contracts, the Commission and title insurance companies may (i) exchange information and experience data with each other, and with the insurance supervisory officers and insurers of other states, and with national organizations and associations, including duly licensed rating organizations, and (ii) may consult and cooperate with them with respect to risk rates, premiums, and forms of policies and contracts. B. Any two or more licensed title insurance companies may act in concert with each other and with others with respect to any or all matters pertaining to the making of risk rates or premiums, or the preparation of forms of title insurance policies, underwriting rules and practices, surveys and investigations, or the furnishing of loss or expense statistics, or other information or data relating thereto. 1952, c. 317, § 38.1-734; 1986, c. 562.

Va. Code Ann. § 38.2-4616 Notification to buyers of the availability of owner's title insurance

In connection with any transaction involving the purchase or sale of an interest in residential real property in this Commonwealth, the settlement agent as defined in § 55.1-900 , before the disbursement of any funds, shall obtain from the purchaser a statement in writing that he has been notified by the settlement agent that the purchaser may wish to obtain owner's title insurance coverage including affirmative mechanics' lien coverage, if available, and of the general nature of such coverage, and that the purchaser does or does not desire such coverage. The notification shall include language that the value of subsequent improvements to the property may not be covered. The failure of a settlement agent to provide the information requested by this section shall not of itself be deemed to create a cause of action that would not otherwise exist. 1992, c. 733.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://law.lis.virginia.gov/vacode/title38.2/chapter46/Fetched: 10/16/2026

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