Title insurer failures are more bad news for homeowners trying to sell or refinance property in the current down market. These transactions can trigger a title search and a potential claim. Recourse for policyholders can be difficult and, at best, slow, since very few states cover title insurance under their guaranty funds.

Two of the financially impaired title companies, Commonwealth Land Title Insurance Co. and Lawyers Title Co., were subsidiaries of LandAmerica Financial Group, which went into Chapter 11 bankruptcy in November 2008. They were declared in hazardous financial condition by state insurance regulators and were purchased by Fidelity National Financial Inc. in December 2008.

Meanwhile, the 109-year-old Guarantee Title and Trust Co. and Guarantee Title Insurance Co., subsidiaries of Reliant Holding Co., were placed in liquidation because of negative policyholders' surplus, and all policies were canceled. GTIC alone wrote 73,824 policies in 16 states from 2004 to 2008.