Different types of title policy insurance

by | Sep 6, 2017 | Blog

Unlike other types of insurance, there aren’t a lot of difficult choices to make when it comes to selecting title policy insurance.


Most consumers are accustomed to selecting from liability and personal coverage for auto insurance to a variety of other packages for life insurance, home insurance, health care insurance and more. In addition, they need to decide how much to invest and whether to add riders, umbrellas and a variety of other options. It goes on and on.


But with title insurance, you’ll find only two types: an owner’s policy and a lender’s policy.


Just as its name suggests, an owner’s policy is the one that protects the property owner. Imagine buying a new home only to find that there are liens on it or easements you didn’t know about. Resolving those issues can be both frustrating and expensive.


But the owner’s policy will protect an owner’s financial interest in the property, covering the costs of any legal fees required to make the owner whole again. Better still, it will require a title search prior to issuing the policy—a search that typically reveals any outstanding financial obligations against the property, other rights to the same property, forgery, fraud and other issues that can dramatically affect your investment.


The lender’s policy is required by the lender that secures your mortgage. The policy protects them from issuing a loan for a property that the current owner doesn’t have the free and clear right to sell. Title insurance is critical for lenders because most mortgage loans in the U.S. are issued by people acting in a fiduciary capacity—that is, lending other people’s money (e.g., banks, savings and loans, life insurance, etc.). Title insurance protects the lender’s investment.


In the end, the most important choice a consumer will need to make about title insurance is simply whether to get it. It’s a small investment with immeasurable returns—helping you avoid unanticipated problems with your home purchase and enjoy peace of mind once it’s yours.