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Definition
Title insurance is a one-time-premium policy that protects against defects in a property's title, such as liens, ownership disputes, or recording errors. Unlike most insurance, you pay a single premium at closing rather than ongoing monthly costs. There are two main types: a lender's policy, which protects your mortgage lender up to the loan amount, and an owner's policy, which protects you, the buyer, for your equity stake. A lender's policy is typically required when you finance a home, while an owner's policy is often optional but strongly recommended. If a past claim against the property surfaces after you buy—say an unpaid contractor lien or an undisclosed heir—your policy can cover legal defense and losses. Coverage depends on the policy terms and the title search performed before closing, so review what's included carefully.
Also Known As
Owner's title policy
Lender's title policy
Title protection
Title insurance coverage
Used in Context
- At closing, the buyer purchased an owner's title insurance policy to protect against any undiscovered liens from the prior owner.
- Her mortgage lender required a lender's title insurance policy before funding the loan.
- A homeowner referred through Dreamy Leads learned that his title insurance covered the legal costs when a forgotten easement claim emerged months after purchase.
Do I really need an owner's title insurance policy?
A lender's policy is usually required when you finance, but it only protects the lender. An owner's policy protects your equity against title defects like liens or ownership disputes. It's often optional yet strongly recommended, since it's a one-time premium paid at closing that can cover legal defense later.
How much does title insurance cost?
Title insurance is a one-time premium paid at closing rather than a monthly bill. The exact cost varies by state, property value, and provider, and is often regulated locally. Because pricing differs widely, ask your title company or closing agent for a quote specific to your purchase and location.
What does title insurance actually protect against?
It protects against defects in a property's title, including liens, ownership disputes, and recording errors that may have existed before you bought. A lender's policy protects the lender, while an owner's policy protects the buyer. Coverage and exclusions depend on your specific policy terms, so review them closely.
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