Page 26 - Home Buyers and Sellers Guide - Hawaii

FREQUENTLY ASKED QUESTIONS ABOUT TITLE INSURANCE

Q. What does title insurance insure?
A. Title insurance offers protection against claims resulting from various defects (as set out in the policy) which
may exist in the title to a specific parcel of real property effective on the issue date of the policy. For example,
a person might claim to have a deed or lease giving them ownership or the right to possess your property.
Another person could claim to hold an easement giving them a right of access across your land. Yet another
person may claim that they have a lien on your property securing the repayment of a debt. That property may be
an empty lot or it may hold a 50-story office tower. Title companies work with all types of real property.

Q. How much can I expect to pay for title insurance?
A. This point is often misunderstood. Although the title company or escrow office usually serves as a meeting
ground for closing the sale, only a small percentage of total closing fees are actually for title insurance
protection. Your title insurance premium may actually amount to less than 1% of the purchase price of your
home and less than 10% of your total closing costs. The title policy is good for as long as you and your heirs own
the property with the payment of only one premium.

Q. Why are separate owner’s and lender’s title insurance policies issued?
A. Both you and your lender will want the security offered by title insurance. As the owner, you will want
assurances that the home is yours and that you are protected against certain title defects. Your lender will likely
want title insurance in order to protect its loan security interest, and may even be required to have a lender’s
policy in place in order to sell the loan to secondary market investors.

23