With respect to your assessment of the duties of an abstractor...the law would seem to differ with you. The purpose of the e&o insurance is to protect both you and your client from the damages caused by negligence perpetrated in the search and/or reporting the results of the search in an abstract.

The abstractor is charged with exercising reasonable care in both the search of the land records and with the preparation of the abstract. Title insurance companies rely on the abstract in order to know what to exclude from coverage which thus necessitate a release of the encumbrance in question. The buyer also needs to know how badly his title to property is encumbered prior to his purchase of the property.

There are four elements to negligence 1) the duty owed to a client by the abstractor, 2) the breach of the duty owed by the abstractor, 3) damages and 4) proximate cause.

1)  As to the duty owed ... resort to an industry standard as to what a reasonable abstractor would have done during the search and/or preparation of the abstract would establish this duty for purposes of a negligence suit. It would most likely be established through the testimony of an expert witness at trial.

2)  Whether the abstractor breached the duty would depend upon his conduct as compared to the industry standard established also by the expert testimony (opinion in response to a hypothetical question).

3)  Damages are a fairly easy matter to establish.

4)  Whether the damages were proximately caused by the breach of the duty owed by the abstractor to his client is always a question for the jury, but it would seem that if the damages were the result of a client's reasonable reliance on the abstractor's search and abstract, and the abstractor failed to deliver ...the answer is a slam dunk verdict for the plaintiff.

E & o insurance is extremely expensive. However, electing not to carry the insurance is not the answer to the problem. Rather raising the prices of the abstractor's work to accommodate the client's requirement that he carry the insurance would seem to be a more reasonable answer. The client requires it...the client should be charged accordingly. I remember a time (The good old days) when clients understood this expense, and paid abstractors in amounts sufficient to cover the expense. I think that some form of legally unified effort to raise prices is the way to go.

 

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