Common Myths About Title Insurance – BUSTED!

by | Aug 7, 2017 | Blog

Title insurance is something most home owners have heard of, or even purchased. But many aren’t quite sure what it is and how it works, leading to a lot of misconceptions. Following are the top ten myths about title insurance—and the truth behind those myths.


Myth: Title insurance covers only the bank or lender.

Mortgage companies require title insurance to protect the loan, so there’s a policy for that called the “loan policy.” But owners can—and should—get their own “owner’s policy” to cover their risk. In most states, the seller pays for it, though in Minnesota the fee can be used as a bargaining chip in negotiations.


Myth: I have to use the same title company my lender uses.

You get to choose your title company, and it’s an important choice. You’ll want an experienced company that speaks your language. See our related blog: 5 Things to Look for When Choosing a Title Insurance Company.


Myth: Title insurance will carry over from the seller.

Sorry. New owner: new search, new insurance policy. Policies expire when the property changes hands. The good news is that it’s a one-off. Unlike your homeowner’s insurance, you pay once and you’re done.


Myth: If I refinance, I don’t need a new title insurance policy.

 Yes and no. The lender will require a new title insurance policy, but yours remains in effect as long as you own the property.


Myth: Title insurance is required.

Title insurance is not required, but it is highly recommended because according to the American Land Title Association, 25 percent of properties have a title defect that requires attention before closing. How are they found? Title search. And what about mistakes in public records, forged or fabricated documents, unknown heirs claiming ownership or last-minute HELOCs? Title insurance.


Myth: Title insurance protects the value of my home.

 Title insurance kicks into action when a claim is made against the title of your home and covers attorneys’ fees to cure the problem—which will be required should you wish to sell the home.


Myth: Title insurance is expensive.

The insurance is not expensive, but title claims are. Title insurance fees are regulated and generally account for only 4 percent of closing fees. You can get a free estimate by visiting and clicking on “Get A Quote.”