What is Title Insurance?

When you purchase real estate, you want the assurance that the property you are buying will truly be yours. Other than your mortgage holder, no one else should have any claims or restrictions against your home.

Title insurance eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property. Title insurance is different from other types of insurance in that it protects you, the insured, from a loss that may occur as a result of previous matters or faults. Other types of insurance such as auto, life or health cover you against losses that may occur in the future. Title insurance does not protect against any future faults. Another difference is that you pay a one-time premium. A title insurance policy will protect you from risks or undiscovered interests.

There are two basic types of title insurance policies: Owner's Policies and Lender's Policies. An Owner's Policy insures the purchaser or owner against a loss that may arise by reason of a defect in their title or ownership of real property. A Lender's Policy insures the lender that it has a priority lien on the property. In addition, the title insurance company agrees to defend the owner or lender (as the case may be) in court if there is an attack on the title. It will cover attorney and court expenses or pay a loss caused by the defect in title up to the face amount of the policy subject to the terms listed in the policy.