Do I Really Need To Purchase Title Insurance For My Home?

The question of whether or not to purchase title insurance is one that we often get asked as insurance agents. The answer is quite simply….YES.

Title insurance is a policy that protects against financial losses due to defects in the titles of real property, which will render mortgage loans invalid. There are two types of title insurance that can be purchased: owner and lender.

An owner’s title insurance policy protects the purchaser of the property from any and all title defects. This policy will respond if it is found out in the future that the title to the property in question is compromised and a dispute arises. This policy will pay up to the limits of the policy to clear the title. This type of policy is not transferable from one party to another.

A lender’s title insurance policy is held by the mortgage lender of a property. A lender’s policy will protect the financial interests of the lender if the title is ever called into question. This type of policy is can be transferred to one lender to another if the mortgage is sold to another lender.

These policies are generally inexpensive and worth their weight in gold if a title issue ever comes up on your property (it can be a simple as a one word discrepancy on the title). The costs associated with resolving title disputes can become very expensive depending on how complex the issue is. Most land/home owners do not keep a “title dispute” rainy day fund, which can become very problematic if title insurance is not purchased.

So, before you fall victim to a claim that you never though could happen…..buy a title insurance policy when you purchase a piece of property!