What Is Title Insurance?
Title Insurance: A one-time policy that protects against losses from past problems with a property's ownership.
Also called: lender's title policy, owner's title policy
Title insurance protects against financial loss from ownership problems that existed before you bought the home but weren't found in the title search.
Two policies
- Lender's policy: required for nearly every mortgage; it protects the lender up to the loan amount
- Owner's policy: protects you up to the purchase price; optional in many states but strongly recommended
What it covers
- Forged or fraudulent documents in the chain of title
- Unknown heirs claiming ownership
- Recording errors
- Undisclosed liens
- Legal defense costs if someone challenges your ownership
Cost
A one-time premium at closing, based on the price or loan amount and often regulated by the state. In some areas, the seller customarily pays for the owner's policy.
Good to know
The owner's policy lasts as long as you or your heirs own the home.