(a) The title insurance agency, on behalf of the title insurer, shall:

1. (1) Offer settlement or closing protection coverage to the parties; and
2. (2) Obtain their election in writing.

(b)

1. (1) Settlement or closing protection letters shall, if requested by a party to a closing handled by the title insurance agency, be issued to the requesting party for a charge payable solely to the insurer and may indemnify against loss of settlement funds that occur in connection with the closing, including theft of settlement funds and failure to comply with written closing instructions.
2. (2) Nothing herein limits or restricts title insurers from offering greater coverage.

(d) Every settlement or closing protection letter shall include, at a minimum, the following provisions, coverages, and exclusions:

1. (1) The parties to be afforded protection along with a brief description of their relationship to the transaction covered;
2. (2) A description of the transaction for which the letter is being issued;

3. (3) Provide coverage for the theft or misappropriation of closing funds or for the failure of the title insurance agent or any title insurance agency conducting a closing of the transaction to comply with any written closing instructions to the extent that they relate to:

   1. (A) The status of the title to said interest in land or the validity, enforceability, and priority of any lien of a mortgage on this interest in land, including obtaining any documents or the disbursement of funds necessary to establish such status of title or lien;
   2. (B) Obtaining any other document specifically required by any party to the transaction, but only to the extent the failure to obtain such other document affects the status of the title to said interest in land or the validity, enforceability, and priority of the lien of any mortgage on the interest in land; or
   3. (C) Fraud in handling of any documents in connection with such closings to the extent such fraud relates to the status of the title to said interest in land or to the validity, enforceability, and priority of the lien of any mortgage on the interest in land;
4. (4) A provision that if the letter is issued at the request of a lender that its assignees, successors, assigns, debtors, and warehouse lenders shall be protected as if the letter were requested by and directed to them by the title insurer;

5. (5)

   1. (A) A provision allowing the title insurer to be subrogated to all rights and remedies that a party recovering under the letter would have had against any person or property had the party not been so reimbursed.
   2. (B) The liability of the title insurer for any amounts paid to a party shall be reduced to the extent that the party has knowingly and voluntarily impaired the value of such right of subrogation;

6. (6)

   1. (A) A provision allowing the title insurer the ability to recover from the party asserting a claim under the letter for any reimbursement such party received for which the insurer has previously paid the party under the letter.
   2. (B) The liability of the title insurer for any amounts paid to a party shall be reduced to the extent that the party has knowingly and voluntarily impaired the value of such right to such reimbursement;
7. (7) A provision providing any liability of the title insurer for loss incurred by a party in connection with the closing of the transaction by a title insurance agent, agency, or person closing the transaction may be limited to the protection provided by the letter, but shall not affect the protection afforded by a title insurance binder, commitment, or policy of the title insurer;

8. (8)

   1. (A) That claims under the letter shall be made promptly to the title insurer at its principal office as set forth in the letter.
   2. (B) When the failure to give prompt notice shall diminish the amount the title insurer could have recovered in the absence of the delay, the liability of the title insurer hereunder may be reduced to the extent of such diminution;
9. (9) Provide the state or states to which the coverage afforded by the letter applies; and

10. (10) May contain one (1) or more of the following exclusions that will relieve the title insurer issuing the letter from liability thereunder:

    1. (A)

(i) Failure of the title insurance agent, agency, or person closing the transaction to comply with any closing instructions that require title insurance protection inconsistent with that set forth in the title insurance binder or commitment issued by the title insurer.

1. (ii) Instructions that require the removal of specific exceptions to title or compliance with the requirements contained in said binder or commitment shall not be deemed to be inconsistent;

   1. (B) Loss or impairment of any funds in the course of collection or while on deposit with a bank due to bank failure, insolvency, or suspension, except such as shall result from failure of the title insurance agent, agency, or person closing the transaction, to comply with any written closing instructions to deposit the funds into a bank that you designated by name;
   2. (C) Mechanics' and materialmen's liens in connection with the transaction, except to the extent that protection against such liens are afforded by a title insurance binder, commitment, or policy of the title insurer;
   3. (D) Failure of the title insurance agent, agency, or person closing the transaction to comply with any written closing instructions to the extent such instructions require a determination by the title insurance agent, agency, or person closing the transaction of the validity, enforceability, or effectiveness of any document contemplated under subdivision (d)(3)(B) of this section;
   4. (E) A settlement or release of any claim without the written consent of the title insurer;
   5. (F) Any matters created, suffered, assumed or agreed to by, or known by any party to the transaction; or
   6. (G) Any exclusion approved by the commissioner.