Title insurance is an insurance policy purchased at closing, or shortly thereafter, that protects your property by insuring against future claims or losses due to title defects resulting from past events, errors and omissions. Examination of a title search or abstract is the first step to obtaining title insurance. If a title claim arises that originated prior to the title search, you are afforded some monetary protection by a title insurance policy.

Title insurance is unique, because it provides coverage for claims made in the future, or losses incurred in the future, resulting from title defects caused by something that happened in the past. Title insurance provides important protection against hidden risks, such as “stray” deeds, forgery, incapacity or incompetency of the parties, and other undiscovered errors.

There are different types of title insurance that protect you in different manners. Like other forms of insurance, most title insurance policies have “standard exceptions” for certain issues that are not covered. These standard exceptions vary from market to market.

Title insurance rates are regulated at the state level and are based on the purchase price of the property. Premiums are paid only once, at the time of closing. Mortgage lenders will almost always require a lender’s title policy, paid by the buyer/borrower as a closing cost. When a lender requires title insurance, an owner’s title policy can be purchased for a nominal additional premium.

There are three types of title insurance:

• Owner’s Title Insurance - Protect the buyer in the amount the buyer paid, from now on, even after the buyer sells the property. It put the issuing attorney in the position of defending the title to the property, and having a vested interest in doing so, should you ever need them.
• Mortgage Title Insurance - Protects the lender interest in the property, not the buyer. When a buyer, or homeowner in the situation of refinancing, borrows money against a property the lender usually requires mortgage title insurance. It is a less expensive policy than the owner’s title insurance because it has more limits. It is only good during the time which the loan exists against the property and for the amount still outstanding on the loan.
• Simultaneous Issue Title Insurance - The best measure of protection. Essentially it is an owner’s title insurance with a mortgage title insurance rider.