What is an ALTA policy?

A closer look at the American Land Title Association (ALTA) policy.

TL;DR: What is an ALTA Policy?

• Standardized title insurance from the American Land Title Association.
• Protects owners and lenders from title defects and disputes.
• Two types: Owner’s policy and lender’s policy.
• Key coverage includes fraud, errors, and undisclosed heirs.
• First American Title actively shapes ALTA standards and best practices.

If you’re in the title insurance industry, “ALTA policy” is likely part of your everyday vocabulary. But even for seasoned professionals, it’s useful to revisit the foundational tools of our trade.

First American Title isn’t just familiar with ALTA policies, we have a presence within the organization as industry advocates. We’re proud to represent 10% of ALTA’s engagement group workforce, with 56 team members actively participating across the organization. Even more notably, we chair seven ALTA committees, playing a direct role in guiding the industry’s best practices, advocacy efforts, and educational initiatives. This level of involvement reflects our deep commitment to elevating title standards and keeping our team and our agents at the forefront of industry knowledge.

Let’s break down what an ALTA policy is, and how it works.

The basics of an ALTA policy.

An ALTA policy is a type of title insurance policy developed by the American Land Title Association (ALTA). These standardized forms are widely accepted across the country and provide a consistent framework for underwriting, issuing, and interpreting title insurance.

There are two primary types of ALTA policies – an owner’s policy, which protects the buyer’s interest in the property, and a lender’s policy, which protects the lender's interest. Each insures against loss or liability resulting from defects in title, liens, or encumbrances that are not disclosed or known at the time of issuance.

Why are ALTA policies important?

For title agents, ALTA policies streamline the transaction process and establish uniformity across jurisdictions. They’re meticulously drafted to mitigate legal ambiguity and provide clear coverage terms and exclusions. They also allow underwriters, lenders, and consumers to rely on consistent protection.

With ALTA policies, everyone involved in a real estate transaction – buyers, sellers, lenders, attorneys, and title professionals – can work from a shared understanding.

Key features of an ALTA policy.

While the specifics vary depending on whether it’s an owner’s or lender’s policy, ALTA policies generally provide coverage for:

• Ownership disputes 
• Undisclosed heirs 
• Errors or omissions in public records 
• Fraud or forgery 

Standard exclusions typically include governmental regulations, e.g., zoning laws, issues created after the policy date, known defects or exceptions listed in the schedule of exclusions, but supplemental policies exist to fill in these gaps. For example, First American Title offers the Eagle Policy for Homeowners®, which provides the most comprehensive coverage available.

ALTA policies provide confidence.

An ALTA policy is more than just a document – it’s a legal instrument that represents the backbone of the title insurance coverage in the U.S. For agents, understanding its nuances is critical to protecting clients and maintaining trust in the transaction process.

ALTA policies help ensure that everyone walks away with confidence – and in our line of work, confidence is everything.

If you’re a First American Title agent, you have access to more educational resources and additional coverage available through the Eagle Policy for Homeowners.

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