Under the ALTA 2006 form policy, what occurs upon the company settling and paying a claim?

When a title insurance company settles and pays a claim under the ALTA 2006 form policy, the process of subrogation takes place. This means that after the title insurer has compensated the insured for a valid claim, the insurer gains the right to step into the shoes of the insured and pursue recovery from third parties responsible for the loss. This is a crucial function of title insurance, as it helps to manage risk and encourages accountability among parties who may have caused the title issue.

Additionally, the insured becomes entitled to receive the benefits of the settlement, while the title insurance company is entitled to pursue any available legal remedies against parties that created the title defect. This relationship ensures that the financial interests of both the insurer and the insured are protected, maintaining balance in the title insurance system and ensuring that claims are handled fairly and efficiently.

Focusing on the term "entitled," when the company pays a claim, the insured is entitled to recompense for their loss. This dual aspect of subrogation and the entitlement of the insured helps to clarify the roles and protections afforded by the title insurance policy.