Purchasing a home involves more than signing paperwork and exchanging keys. A property’s legal history can carry hidden risks. Title insurance protects you from financial loss due to title defects or disputes that may arise after the transaction.
Understanding what title insurance covers
Title insurance shields you from claims against your ownership rights. These claims can include unpaid property taxes, liens from previous owners, or errors in public records. Without coverage, these issues could force you into costly legal battles or even cause you to lose the property. The policy ensures that if a covered problem surfaces, the insurer handles the legal and financial fallout.
Why title searches aren’t always enough
Before closing, a title company performs a search to uncover problems. While thorough, this search may miss certain defects, especially those involving forged documents, undisclosed heirs, or clerical mistakes. Title insurance acts as a safeguard in case something slips through. Even with a clean title search, surprises can still come up. That’s when your policy steps in.
The difference between lender’s and owner’s policies
Lender’s title insurance protects the mortgage lender, not you. If there’s a problem with the title, their investment stays protected. However, you remain vulnerable without an owner’s policy. An owner’s policy defends your personal interest in the property and stays in effect as long as you or your heirs own it. Both policies serve different purposes and work best when used together.
Peace of mind for your investment
Buying a home is a significant commitment. Title insurance offers lasting security by reducing your exposure to unknown risks tied to the property’s past. It helps you move forward with confidence, knowing you’re protected from legal issues that could otherwise derail your investment.
