ALTA Risk Management Flashcards
6 cards from real ALTA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 ALTA Risk Management flashcards as text
What is the primary purpose of risk management in the title insurance industry?
Answer: To identify, assess, and mitigate potential title defects and losses before and after policy issuance
Risk management in title insurance focuses on identifying potential title defects and implementing measures to prevent losses before and after policies are issued.
Which of the following is a common fraud scheme that title companies must guard against?
Answer: Wire fraud involving diverted closing funds
Wire fraud, where cybercriminals intercept closing communications and redirect funds to fraudulent accounts, is one of the most significant fraud threats facing title companies today.
What is 'title plant' in the context of title risk management?
Answer: A repository of title records maintained by a title company for efficient searching
A title plant is a private repository of indexed title records maintained by a title company or agency that enables faster and more accurate title searches to reduce risk.
Under ALTA Best Practices, what must a title company do to protect customer non-public personal information (NPI)?
Answer: Implement written information security policies and procedures to safeguard NPI
ALTA Best Practices Pillar 3 requires title companies to adopt and maintain written policies and procedures to protect customer NPI from unauthorized access or disclosure.
What is a 'gap' risk in title insurance?
Answer: The risk that a lien or encumbrance is recorded between the effective date of the title commitment and the date of recording the insured instrument
Gap risk refers to the period between the commitment date and the recording date during which liens or other encumbrances could be filed against the property before the insured deed or mortgage is recorded.
How does a title company typically manage gap risk at closing?
Answer: By recording the deed and mortgage simultaneously or obtaining a gap indemnity agreement
Title companies manage gap risk by recording documents as quickly as possible after closing or by obtaining an indemnity agreement from the seller covering any intervening liens.
How this page was made: written with AI tools and published by Nathan Beja, founder of Practice Test Geeks, who is responsible for its content. Exam facts are checked against the official sources listed below. Not reviewed by a subject-matter expert. Editorial policy
Sources & references
Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy
- alta.org — Eligibility, fees, registration deadline, score validity, renewal · verified Nov 2026