What is Title Insurance

If you own or lease a car, you should already have an automobile insurance policy. Some people buy an insurance policy before they take an expensive vacation in the event it gets cancelled. Superstar athletes sometimes even take out insurance policies on their legs or arms in case they are injured. But many people buy their home without understanding that they have the opportunity to buy title insurance to protect their greatest single asset.

Title insurance is a policy that you can purchase as the purchaser of a home (an “owner’s policy”) or that lenders purchase to protect their interest until the loan is repaid (a “lender’s policy”) that will protect you from claims that allegedly took place before you purchased your home.

When you purchase your home, farm, business, or other piece of real estate and take out a mortgage loan, the lender typically will request that a title company search the public record of deeds, mortgages, liens, and other recorded documents to ensure that their mortgage is protected. If a problem is found, such as a deed that was improperly recorded, the title company will work to remedy that issue and then the underwriter will consider whether they can issue a title insurance policy for the lender.

Sometimes there are problems in the public record, such as a mistake in the filing or a forgery in a recorded document, that are not discovered before you purchase your home. This often happens despite a skilled title examiner carefully reviewing the records. In that case, the lender’s title insurance policy will help protect the lender’s mortgage rights.

However, the purchaser also can purchase an owner’s title insurance policy that will protect their rights of ownership and this policy will last as long as you own your home.