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What is Title Insurance?
Homeowners need title insurance to protect their property rights and financial interests in the event of unexpected issues related to the property's title. While the title search and examination help uncover major issues, title insurance provides further coverage against potential problems like hidden defects, fraudulent activity, and errors or omissions.
Let’s look at the two types of title insurance: An Owner’s Policy and a Lender’s Policy.
Owner’s Title Insurance Policy
This is an optional but highly recommended policy that protects your ownership rights if title issues are discovered later. The most common title issues covered by owner’s title insurance include:
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Unknown liens and debts, such as unpaid mortgages, tax liens, or judgments against previous owners
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Forgeries, like a fraudulently signed deed or mortgage
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Public records errors, such as incorrect property descriptions or inaccurate legal documents
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Undisclosed heirs or missing will
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Inaccurate surveys, encroachments, or boundary disputes
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Undisclosed easements that affect the property’s use
This policy lasts for as long as you and your heirs own the property.
Lender’s Title Insurance Policy
Lenders usually require a lender’s title insurance policy to secure a mortgage, as it protects them against problems with your title. This protects the lender for the life of the loan.
A lender’s policy does NOT protect you—which is why it’s best to invest in an owner’s title insurance policy!
Why Do You Need Title Insurance?
Consider it an investment in your peace of mind. Without title insurance, you will be responsible for any financial and legal issues. At worst, these issues could invalidate the title of your home, jeopardizing your legal ownership.
When you invest in title insurance, you:
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Gain coverage for past problems on your title (homeowner’s insurance only covers future risk)
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Protect you and your heirs as long as you (or they) own the home
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Only pay once for your policy—there are no monthly premiums!