Title insurance is an insurance policy that protects your legal rights to own, possess, use, control, and dispose of land. For a more detailed definition, check out our page on Title Insurance (under our SERVICES menu).
Why do I need title insurance if the title will be thoroughly searched?
There are some issues that may not be discovered during a title search. For example, a divorce could be recorded outside of the county where the property is located and therefore would not be discovered by an abstractor searching the county records.
There could be undiscovered heirs that could later present claims of ownership. There can be instances of forgery; property conveyed by a minor or someone who is not competent; or deeds executed under an expired power of attorney. Additionally, there could be errors in the public record that could later be revealed.
Title Insurance provides coverage for these undisclosed title defects that might later result in a claim.
My lender requires lender’s title insurance. Won’t that cover me as well?
Lender’s title insurance covers only the lender—the property owners are not covered. So if there were to be a claim against the property, the lender would be reimbursed for the remaining balance on the mortgage, but the property owners would not be compensated unless they purchased owner’s title insurance. Owner’s title insurance is usually purchased at closing, and the one-time premium covers the property owners for the entire time they own the property.