What Is Title Insurance?

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property.
Each title insurance policy is subject to specific terms, conditions and exclusions.

What are liens and encumbrances?

A contract to protect an owner or lender against losses arising through defects in title to the real estate owned.
Provides indemnification.
Pays for defending against any lawsuit attacking the title as insured, and either clear the title or pays for insured’s losses resulting therefrom.
One-time premium, unlike casualty or property insurance.
Usually, effective upon the filing of deed or mortgage with County Recorder.

What types of coverage?

What Does it Cover?

Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy.

Owner’s Policy:

Usually issued in the amount of the real estate purchase.
It is purchased for a one-time fee at closing and lasts for as long as you or your heirs have an interest in the property.
Only an Owner’s Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search.
Possible hidden title problems can include:
Errors or omissions in deeds
Mistakes in examining records
Forgery
Undisclosed heirs

Loan Policy :

Most lenders usually require a Loan Policy when they issue a loan.
The Loan Policy is usually based on the dollar amount of the loan.
It only protects the lender’s interests in the property should a problem with the title arise.
It does not protect the buyer.
The policy amount decreases each year and eventually disappears as the loan is paid off.

Homeowner’s Policy :

Option of purchasing a policy with expanded coverage.
Called the Homeowner’s Policy and it covers more things than the Owner’s Policy.

Ask your local title company for an explanation of the expanded Homeowner’s Policy so you can decide which policy is the best one for you.