Key Takeaways
- Title insurance protects against PAST DEFECTS in property ownership—it's retrospective, not prospective like other insurance
- OWNER'S policy protects the property buyer; LENDER'S policy protects the mortgage lender—buyers often pay for both
- A ONE-TIME premium is paid at closing, providing coverage for as long as the insured has an interest in the property (no annual renewals)
- Title insurance covers defects like forged deeds, undisclosed heirs, recording errors, liens, encumbrances, and survey/boundary disputes
- The title search and examination process identifies defects BEFORE closing; the insurance protects against defects NOT discovered
Last updated: January 2026
Title Insurance
How Title Insurance Differs
Title insurance is UNIQUE among all insurance types:
| Feature | Title Insurance | Other Insurance |
|---|---|---|
| Coverage Period | PAST events (retrospective) | FUTURE events (prospective) |
| Premium | ONE-TIME at closing | Annual/monthly premiums |
| Duration | Until property sold | Policy period (usually 1 year) |
| What It Covers | Unknown past defects | Known and unknown future risks |
| Loss Prevention | Title search before policy | Underwriting before policy |
Quick Answer: Title insurance is paid once at closing and protects against PAST defects in the ownership chain that weren't discovered during the title search. Unlike other insurance that covers future events, title insurance covers problems that already exist but are unknown.
Types of Title Policies
Owner's Policy
| Feature | Details |
|---|---|
| Who It Protects | The property buyer |
| Coverage Amount | Purchase price of property |
| Duration | As long as owner (or heirs) has interest |
| Required? | Optional but highly recommended |
Lender's Policy (Loan Policy)
| Feature | Details |
|---|---|
| Who It Protects | The mortgage lender |
| Coverage Amount | Loan amount (decreases as loan paid) |
| Duration | Until mortgage is paid off |
| Required? | Almost always required for mortgages |
Important: Even if you pay for the lender's policy, it does NOT protect you as the buyer. You need a separate owner's policy for your protection.
What Title Insurance Covers
Covered Defects and Risks
| Category | Examples |
|---|---|
| Ownership Issues | Forged deeds, fraudulent sellers, unknown heirs |
| Liens and Encumbrances | Unpaid taxes, contractor liens, judgment liens |
| Recording Errors | Clerical mistakes, improper indexing |
| Legal Defects | Invalid documents, improper execution |
| Survey Issues | Boundary disputes, encroachments |
| Access Problems | Lack of legal access to property |
Specific Covered Losses
- Someone else owns an interest in your title
- A document is forged, improperly signed, or not delivered
- Defective recording of any document
- Unmarketable title
- Lack of legal access to the property
- Lien of any mortgage or deed of trust not shown
- Charges by homeowners association not disclosed
What Title Insurance Does NOT Cover
Standard Policy Exclusions
| Exclusion | Explanation |
|---|---|
| Known Defects | Problems disclosed before closing |
| Government Regulations | Zoning, building codes, ordinances |
| Eminent Domain | Government taking through condemnation |
| Defects Created by Insured | Problems you caused yourself |
| Matters Disclosed in Survey | Issues shown on survey report |
| Encroachments Not in Records | Unless survey is obtained |
Items Requiring Endorsements
- Gap coverage (between title search and closing)
- Survey matters
- Environmental liens
- Mechanics liens not yet recorded
- Creditor's rights exclusion removal
The Title Process
Steps Before Insurance Issued
- Title Search: Examine public records back 40-60 years
- Title Examination: Attorney/examiner reviews findings
- Title Commitment: Report of findings and requirements
- Clearing Defects: Resolve any issues found
- Policy Issuance: Title insurance policy issued at closing
What the Title Search Reviews
| Document Type | What's Checked |
|---|---|
| Deeds | Chain of ownership |
| Mortgages | Outstanding liens |
| Judgments | Court judgments against owners |
| Tax Records | Unpaid property taxes |
| Probate Records | Estate and heir issues |
| Court Records | Pending litigation |
Premium and Cost
Premium Structure
| Feature | Details |
|---|---|
| Payment | Single premium at closing |
| Amount | Based on property/loan value |
| Typical Cost | $500 - $3,500 (varies by value/location) |
| No Renewals | Coverage continues without additional payment |
Who Pays?
| Policy Type | Who Typically Pays (varies by state/custom) |
|---|---|
| Owner's Policy | Buyer (or negotiated) |
| Lender's Policy | Buyer (usually) |
Claims Process
Filing a Title Claim
- Discover defect affecting ownership
- Notify title company in writing
- Provide documentation of loss
- Title company investigates and responds
- Resolution: Cure defect, defend, or pay claim
How Title Claims Differ
| Standard Insurance Claim | Title Insurance Claim |
|---|---|
| Pay loss and close | May cure the defect instead of paying |
| Reactive only | Title company may defend your ownership |
| Cash settlement common | Legal defense often provided |
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Test Your Knowledge
How is title insurance different from other types of insurance?
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Test Your Knowledge
Does a lender's title policy protect the property buyer?
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Test Your Knowledge
What does title insurance cover?
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