What Is Title Insurance?

Title insurance protects against loss – since it has “insurance” in the name, everyone knows that! But what exactly is title insurance, who does it protect, and what does it cover?

What is Title Insurance?

Title insurance is a form of insurance that protects against financial loss caused by defects in a property title. The most common claims filed against a title include back taxes, liens, and conflicting wills. It’s important to protect yourself from the possibility of these sorts of issues as they can become very costly. In the worst cases, they can cause buyers to lose homes.

Unlike traditional insurance, title insurance protects against past blemishes, not future events. Title insurance can cover things like:

• Forgery and fraud
• Incorrect signatures on title documents
• Ownership by another party
• Flawed record-keeping
• Outstanding lawsuits or liens

It’s a smart choice to look into title insurance since it protects against a variety of potential losses, which may include the home itself. However, which kind of title insurance do you need?

What are the Different Types?

There are two types of title insurance:

Lender’s Title Insurance

Almost all major lenders require borrowers to purchase a lender’s title policy. This protects the lender in the event that the seller is not able to properly transfer property rights to a new owner. It’s important to note that this only protects the lender – not the buyer.

Owner’s Title Insurance

The owner’s title policy protects the buyer. Since title searches are sometimes erroneous, and in some cases only go back one deed, it’s important to be protected since the owner is still at risk of financial loss. Although the owner’s title insurance is usually optional, it can protect against loss incurred from discoveries made at a later date.

Where Can I Get it?

The closing agent typically initiates the insurance process upon completion of the purchasing agreement and can recommend one of several common underwriters such as Fidelity National Financial. Owner’s title insurance usually costs about 1% of the total property value.

Are you interested in buying or selling a home? Contact us today at 713-364-5883 or info@angelfultzrealty.com.