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Title Insurance Explained
A comprehensive guide to understanding title insurance, why you need it, and how it protects your investment.
1.2 MB • PDF
Title insurance is a form of indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property. Unlike other forms of insurance that protect against future events, title insurance protects against claims for past occurrences.
When you purchase a home, you're not just buying the property—you're buying its history. That history can include liens, encumbrances, or other issues that could threaten your ownership. Title insurance ensures that if a problem arises from the property's past, you're protected.
There are two types of title insurance policies:
1. Owner's Policy: Protects the homeowner for as long as they or their heirs have an interest in the property.
2. Lender's Policy: Protects the mortgage lender's interest in the property.
Most lenders require a Lender's Policy, but an Owner's Policy is optional—though highly recommended. The one-time premium is paid at closing and provides protection for the entire duration of your ownership.
Frequently Asked Questions
Do I really need title insurance?
Yes. Even if you're buying a brand new home, the land it sits on has a history. Title insurance protects you from that history, including unknown liens, errors in public records, or claims from missing heirs.
How long does title insurance last?
The Owner's Policy protects you for as long as you or your heirs have an interest in the property. It's a one-time premium paid at closing.
What does title insurance cover?
Title insurance covers issues like unknown liens, errors in public records, fraud, undisclosed heirs, and boundary disputes that existed before you purchased the property.