Title insurance is generally not as well understood as other forms of home insurance, however; it is just as important! When you purchase a home, you are purchasing the title to the property & the right to occupy it. Title insurance protects you against title hazards such as claims and rights by the previous owners. Title Insurance is a one-time premium paid at closing which protects the homeowner against loss from defects that already exist in the chain of title.
There are two different types of title insurance:
• Lender’s Coverage (required by the lender if the home is financed)
• Owner’s coverage
Lenders require mortgagee title insurance as security for their investment in real estate, in the same way they require homeowners to have fire/hazard insurance. A lender’s policy protects the lender in the event of a loss due to title defects which are not known at the time of the sale. A lender’s policy protects the lender, and does not protect the homeowner.
Owner’s title insurance lasts as long as you, the policyholder – or your heirs – have an interest in the insured property. An owner’s title policy protects the homeowner in the event of a loss caused by a defect in title. Examples of defects in title are errors of public records, unsatisfied notes, previously forged documents, unknown heirs claiming the rights to your property. These are just a few of examples that jeopardize your rights to the title of your home.
Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims – all for a one-time charge at closing.
Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner’s title insurance policy.