Chap. 79.—An ACT to amend the Code of Virginia by adding to Chapter 172
thereof a new section numbered 4325-a, defining “title insurance”; and pro-
viding for the organization, regulation, supervision and control of title insur-
ance companies. [S B 157]

Approved February 27, 1936

1. Be it enacted by the General Assembly of Virginia, That the
Code of Virginia be amended by adding to Chapter one hundred and
seventy-two thereof, a new section to be numbered forty-three hun-
dred and twenty-five-a, which new section shall read as follows:

Section 4325-a. Title Insurance Defined; Supervision of Title In-
surance Companies; Capital Requirement; Investments; Reserves.—
(a) “Title insurance,” as used herein, means insurance of titles to
property and against loss by reason of defective titles or encumbrances,
or insurance of the correctness of searches for instruments, liens and
charges affecting property, or both.

(b) Every insurance company transacting the business of title in-
surance in this State is placed under the supervision and control of the
State Corporation Commission.

(c) The minimum capital of any domestic title insurance company
hereafter organized shall be not less than two hundred and fifty thou-
sand dollars; and no foreign or alien title insurance company, here-
after applying for a license to do business-in this State, shall be allowed
admission to this State, unless such company shall be possessed of at
least two hundred and fifty thousand dollars capital, fully paid in
and invested as required by the laws of the State or country where such
company was organized. This requirement shall be in lieu of the re-
quirements as to capital and surplus of section forty-two hundred and
four.

(d) No domestic title insurance company shall invest its funds or
assets, exclusive of an amount equal to its surplus and its capital, in
excess of the minimum required by the laws of this State, except in
securities permitted for the investment of similar funds or assets of
domestic life insurance companies.

(e) On any contract of title insurance, hereafter issued by a do-
mestic title insurance company, there shall be reserved initially a sum
equal to ten per centum of the original premium, whether or not the
risk shall be for a fixed time. If for a fixed time, then at the end of
each year for the first five years, there shall be a reduction in the sum
reserved of one per centum of the original premium, and thereafter at
the end of each year of the remainder of said time a reduction of a
pro rata portion of the remaining five per centum thereof, except that
if the risk is of a mortgagee, trustee in a deed of trust to secure debt,
or creditor secured thereby, no reduction shall be made that will de-
crease the sum reserved below five per centum of the original premium,
until the expiration of the time of the risk. If not for a fixed time,
then a risk shall be deemed to have been written, if of an owner of
property, or any interest therein, for twenty years from the date of
the contract, and if of a mortgagee, trustees in a deed of trust to secure
debt, or creditor secured thereby, for a time expiring three years after
the final maturity of the debt as stated in the mortgage or deed of
trust, or for twenty years from the date of the contract, whichever
time shall be longer. On any contract of title insurance heretofore
issued, a reserve shall be set up and hereafter maintained, in such sum
as would have been required if the above requirements had existed at
and after the date of the contract. Said sums, herein required to be
reserved for unearned premiums on contracts of title insurance shall
at all times and for all purposes be considered and constitute unearned
portions of the original premiums. In calculating reserves, contracts
of title insurance shall be assumed to be dated in the middle of the
year in which they were issued.

2. All acts and parts of acts inconsistent with the provisions of this
act are hereby repealed to the extent of such inconsistency.
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