About Title Insurance
Most homeowners assume that once they have a signed deed to their new property, it belongs to them free and clear of any other interested parties. This is not necessarily true. Title insurance offers the property owner true peace of mind. An owner’s policy of title insurance insures against errors in the title search by offering financial protection if a claim arises involving an assertion of interest in the property by a third party.
Even the most ardent search of the public record can fail to disclose certain issues. If a document was not properly recorded or if there was fraud related to a document, the owner’s policy may provide coverage against liability associated with these defects and protect the property owner. The emphasis of title insurance is simply to eliminate risk for the owner. Title insurance is distinctly different than most other insurances because it protects against prior, as opposed to future, events.
There are two primary types of policies: Owner’s and Lender’s
Owner’s Policy: This protects the owner of the property against future claims of interest in the property by third parties, and provides coverage for title defects related to the property. The policy coverage is based on the purchase price or fair market value of the property. The coverage is good for as long as you or your heirs own the property.
Lender’s Policy: This protects the owner’s lender by insuring that the lender’s mortgage holds a priority lien position relative to the property. This coverage decreases as the loan is paid off.