Homebuyers and owners ask the same question again and again: “Do I need title insurance?” Any real estate professional will answer with an emphatic “yes.” Still, some people are unsure what title insurance actually is. A title is simply a person’s legal right to own and possess a specific property. Title insurance exists as a policy that helps homeowners or lenders defend that ownership right against possible claims. For most homeowners, real estate is the largest asset they will ever hold, and watching that asset slip into someone else’s hands over a false claim is a discouraging thought. Every homeowner would go the extra mile to protect their property, and title insurance should be your first and most important step.
Title insurance isn’t only valuable to homeowners—lenders need its protection too, so they can be confident in their investment. If you finance your home purchase, most lenders will require a lender’s title insurance policy. This type of policy protects the lender only up to the amount of their outstanding loan balance. Lenders need a title insurance policy to safeguard their investment.
Understanding how title insurance differs from a title search helps clarify the benefits of a title insurance policy. A title search is only required before settlement, while title insurance provides protection after settlement. Title insurance can address issues the title “search” may leave uncovered, including forged deeds or releases, instruments created or fabricated under an expired or fabricated attorney, deeds by minors, deeds delivered after death with or without the consent of the grantor or grantee, undiscovered easements, fraud in execution, and many others. Homebuyers with title insurance can rest easy, knowing they are protected from these claims if they arise soon after closing on their purchase.
Additional benefits of title insurance include:
- Coverage for certain costs, attorney’s fees, and other expenses of defending you on any matter insured by the title insurance policy.
- Protection that lasts as long as you and your heirs hold ownership of the property.
- Protection against certain covered risks up to the insurance amount, including title defects caused by:
- Fraud or forgery
- Unpaid mortgage and other liens
- Restriction of access to the land
- Easements or rights of way, limiting use of the property
- Unmarketable title
