Stewart has kicked off the policy in response to Utah's May 1, 2000 legislation that requires all real estate transactions to have a water conveyance rights report. The need for such a product stems from water shortage and allocation problems that have historically dogged the West.
"Particularly in the western United States today," Ted Jones, director of investor relations tells GlobeSt.com, "water rights are becoming even more valuable than the land underneath it, and they are a market commodity all the way from Colorado to California."This new insurance will decrease the risk inherent to real estate transactions where water rights significantly impact the bottom line.
"We are taking the fact that these water rights conveyance reports are required by Utah," says Joe Knox, president of Stewart Water Information tells GlobeSt.com, "and that we are authorized to prepare them, one step further. We are saying that if we are going to be doing the work and are going to do it right then we should be able to issue insurance on that."
This water rights title insurance is being underwritten by Stewart Title Guaranty Co., one of the nation's four largest insurance companies.
This product is the brainchild of Joe Knox and has been in development for more than four years. "Historically, engineers and attorneys have given some sort of opinion with no warranty as to the water rights and a lot of people have relied on state records for water rights (information)," he says.
Ted Jones feels the water rights reports and title insurance will have an impact on every transaction where such rights are an issue, therefore, creating a large potential market for Stewart Water Information. There is a 30% surcharge on insurance when water rights are sold or transferred in connection with a real estate purchase. "For instance, if you have a $10,000 premium for title insurance for the property and you wanted water rights title insurance it would be an additional $3,000," Knox tells GlobeSt.com. Stewart intends to file prices for water rights title insurance with Utah that is sold independent of a real estate transaction at the end of this month.
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