OWNER'S TITLE INSURANCE POLICIES
An owner’s policy generally insures that at the time of purchase (i) you have public access to the property; (ii) you are the owner of the property and no one else has a claim of ownership; (iii) the property is free and clear of liens, except those that may be created by you at or after the time of purchase (e.g., a mortgage lien in favor of your lender); and (iv) that there are no title defects that would affect future marketability.
Owner’s policies have limits - “exceptions” and “exclusions” from coverage. Exceptions are the title insurance equivalent to pre-existing condition limitations on health care coverage. That is, they narrow the scope of what a policy generally insures. Subdivision covenants are an example of a common exception. Covenants may address the size, height, color and/or style of a home, its landscaping, etc. Covenant violations may result in fines or other penalties that are not covered by title insurance.
An exception may negate a portion of policy coverage entirely. For example, if a property does not abut a dedicated public road, a policy will not insure access. That is not to say the property lacks access. Rather, you assume the risk that rights related to (private) access may be changed or terminated.
It is important for buyers to read title insurance commitments carefully in order to make sure that policy limitations are acceptable.