A title insurance policy is a contract of indemity. Its benefits run to the party shown as the insured on Schedule A of the policy. It insures the estate set out in Schedule A of the policy.

Like any contract, its terms are as set out in the body of the policy. The Conditions and Stipulations are printed on the inside of the jacket or cover of the policy. It has a definition of terms and explains the duration of the policy. It explains the duty to give notice to the Company of a possible claim or loss, explains the company's duty to defend against an adverse claim, describes the rights of subrogation and where notices of claims are to be sent among other things.

The front cover page of the policy contains the insuring clause. The issuing company (often called the "underwriter") insures as of the date of the policy (shown in Schedule A) against loss or damage, not exceeding the amount of the policy shown on Schedule A, sustained or incurred by the insured by reason of four things:

     1.   Title to the estate or interest being vested other than as stated in Schedule A;
     2.   Any defect in or lien or encumbrance on the title;
     3.   Unmarketability of the title;
     4.   Lack of right of access to and from the land.

The insuring clause is subject to the Conditions and Stipulations usually shown on the inside cover as mentioned above. The Exceptions of the title are shown on Schedule B, and the Exclusions from Coverage are shown on the front page of the outside cover of the policy.

Exclusions from Coverage are matters the policy does not insure and the Company will not pay for losses or attorney fees or expenses resulting from these matters.
      The first are government related. The policy does not cover losses from laws, ordinances or regulation relating to land use matters, zoning, actions under governmental police powers or rights of eminent domain.
      Also excluded are matters caused by the insured or agreed to by the insured or known by the insured and not disclosed to the Company or losses that would not have been sustained if the insured had paid value for the estate.
      Also excluded are transactions deemed to be fraudulent transfers or preferential transfers under bankruptcy or creditior's rights laws resulting from failure to timely record an instrument of transfer.

The business of title insurnace is fully regulated by the Department of Insurance in the State of New Mexico. All policies are promulgated by the Department. All rates are set by the Department after actuarial studies and testimony at an annual public hearing. Interested parties may attend and observe or they may intervene and testify.
(Section 59A-30-1 through 15 NMSA 1978)

     1.   A title insrance policy is NOT an abstract of title. (Sec. 59A-30-3 G4. NMSA 1978) A policy will not show all of the records that exist about a property. It will not show all of the documents that are recorded in the County Clerk's office.

     2.   It will not show zoning, building permits, code violations, environmental matters.

     3.   It will not show whether a house was built with a permit.

     4.   It will not show whether the property was properly dubdivided.

     5.   A title insurance policy is NOT a liability policy. It does not cover losses resulting from flood or fire.

     6.   It is NOT a Quiet Title Suit. It is not the Title to the property.

     7.   It does NOT insure that the property is accesible by an automobile or that the legal access is the most direct or convenient. It insures a legal RIGHT of access.

     8.   It does not insure against defects that do no cause a loss. In other words, it does not insure that a title is PERFECT.

     9.   It will not show whether the height of a structure violates some restrictive covenant or whether the color violates a restrictive covenant or whether the use violates a restrictive covenant.

    10.   It will not show easements appurtenant to the insured property (i.e. easements on others' property for the benefit of the insured property.)