What is Title Insurance?

As a part of your closing on the real estate you are purchasing, you are required to purchase several types of insurance. Hazard (or homeowners) and flood insurance policies cover damage against fire and other natural disasters.

Private mortgage insurance, if necessary, insures the lender against losses in low equity transactions. Basically, there are two types of title insurance policies: one to protect the lender and one to protect the owner of the home. You are required to provide a policy that protects the lender; you are encouraged to purchase an additional policy which will protect you; an owner’s policy.

Owner's title insurance is completely different than the title insurance you are purchasing for the lender. Some items the title examination uncovers are matters of public record such as unpaid or delinquent taxes, mortgages, judgments against previous owners, easements, restrictions, and leases. A title search will report these defects in the title to the real estate you wish to purchase, so that these matters can be corrected and cleared up. It is the first of many benefits you receive when title insurance is ordered.

Title Insurance protects you from errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title of your new property. As a result, you may be held fully accountable. However, your policy insures that if such an occasion arises, you will be defended free of charge against all covered claims and paid up to the amount of the policy to settle valid claims.

Protect one of your biggest investments! If you are purchasing a new home, it’s wise to make sure an owner’s title policy of insurance is provided to you at closing, as well as providing a lender’s title policy of insurance to the lender financing the home. When you are buy a home or land, you are buying a piece of earth that has been owned by others before you. With more than 100 types of "title defects", you will want to make sure you have 100% ownership of the property you are buying.

You will also want to make sure the property is free and clear from any potential claims that may arise after you own the property. Unlike automobile insurance that protects from a future event, title insurance will protect you from any events that have occurred in the past. The title company that handles your closing will issue the title policies. Just as a life insurance policy requires you to take a medical physical, your property will undergo a thorough search of the public records at the county recorder’s office. Any title defects found will be disclosed to you and will require clearing before the closing date. Sometimes these title matters can be cleared easily by the title agent or an attorney may be required for legal process.

Remember that the best title examination or search cannot protect your equity and home from matters not appearing in the public records. Every title is unique and complex. For further explanation of title insurance it is suggested you consult an attorney.

There are few things in life more important than protecting your home.

For more information read:

Why Title Insurance?

Top 10 Reasons For Not Having Title Insurance