Page 5 - Title Insurance Explained With Closing Tips For Buyers and Sellers

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WHAT IS TITLE INSURANCE AND HOW DOES IT WORK?

To put it simply, title insurance is a way to protect yourself from financial loss and related legal expenses in the event there is a
defect in title to your property that is covered by the policy. Title insurance differs from other types of insurance in that it focuses
on risk prevention, rather than risk assumption. With title insurance, title examiners review the history of your property and seek to
eliminate title issues before the purchase occurs. Title insurance also differs in that it comes with no monthly payment. It’s just a
one-time premium paid at closing.

Do I need Title Insurance?
Absolutely. Title insurance is a way to protect what is likely
your largest investment—your home. An Owner’s Policy
provides peace of mind that your title company will stand
with you if a covered title issue or defect arises after you have
bought your home.

What Does Title Insurance Cover?
Any number of title issues may arise, even after the most
meticulous search of public records. These hidden defects
are dangerous because you might not learn about them
for months, or even years, after purchase. Some common
examples of risks covered by your Owner’s Policy include
defects in title caused by:

• Improper execution of documents • Unreleased mortgages

• Mistakes in recording or indexing legal documents • Mental incompetence of grantors on the deed

• Forgeries and fraud • Impersonation of the true owners of the land by fraudulent
persons
• Undisclosed or missing heirs
• Refusal of a potential purchaser to accept title based on
• Unpaid taxes and assessments
the condition of the title
• Unpaid judgments and liens

How Much Does Title Insurance Cost?
The one-time premium that you’ll pay for a title insurance policy varies by state, but generally is related to the value of your property.
You can use our Rate Calculator to estimate how much your title insurance policy may cost.

What’s Owner’s Title Insurance?
An Owner’s Title Policy is designed to protect you from covered title defects that existed prior to the issue date of your policy.
If a valid claim is filed, your Owner’s Policy, subject to its terms and conditions, will cover financial loss up to the face amount
of your policy.

What’s Lender’s Title Insurance?
A Loan Policy (commonly referred to as a Lender’s Policy) provides no coverage to the homeowner. A Lender’s Policy ensures that
your lender has a valid, enforceable lien on your property. Most lenders require borrowers to purchase this type of insurance policy
to protect their investment.