Almost every financed purchase includes a title insurance policy, and most buyers never learn that it protects the lender, not them. The owner's policy is the one that protects your equity, and it is optional in every state we close in. Here is what each policy does, what it costs and when the owner's policy earns its keep.
Required by your lender as a condition of the loan. It protects the lender's security interest, up to the loan amount, and it shrinks as you pay the loan down. When the loan is paid off, the policy is finished. It does nothing for your equity.
Optional, issued for the purchase price, and it protects you for as long as you or your heirs hold an interest in the property. It pays defense costs if someone challenges your ownership, and it pays the loss if a covered claim succeeds.
Unlike hazard insurance, which covers what might happen next, title insurance covers what already happened before you bought. A title search finds most of it. The policy covers what a search cannot find, and in a world of electronic filings and identity fraud that list is not short.
Each of these puts the cost of defending your ownership on someone else, which is the part people discover only when they need it.
A standard policy does not cover problems you create after closing, such as your own unpaid taxes or a lien from work you contract for. It does not cover zoning limitations, environmental conditions or matters a survey would reveal unless you add the appropriate endorsement. Ask which endorsements are available on your file rather than assuming the base policy is everything.
Title insurance is a one time premium paid at closing, not a recurring bill. Florida publishes promulgated rates, so the premium for a given policy amount is the same regardless of which title company issues it. In North Carolina the policy is issued on the strength of an attorney's title opinion, which is part of why the attorney requirement and the policy are so closely linked there. Georgia and Tennessee premiums are based on filed rates as well.
Because the rate is set, the thing you are choosing when you pick a title company is the service: how fast the search comes back, how clearly the figures are explained, and whether the closing happens when it was supposed to.
Premiums vary by state, policy amount and endorsements. Ask us for a quote with your actual numbers rather than relying on a general estimate.
When we send your quote, the owner's policy is a separate line so you can see what it costs instead of finding it buried. Ask us what the search turned up, what the policy excepts and which endorsements make sense for your property. The answers are specific to your file, and they take five minutes.
Related: closing costs by state · what is a seller net sheet · mobile and remote closings · all services