Ever come across the term Title Insurance? This has come a long way in the industry of insurances. In 1876, a group in Pennsylvania was created to protect buyers of real estate property via creating the first title insurance company. It was their mission to protect people who are into purchasing real estate from loss that can occur.


This insurance was later spread and rooted into other cities in the United States like New York City, Chicago, Minneapolis, San Francisco, and Los Angeles. Here are some details about the Title Insurance Definition, Types, Policy, Costs & Companies.

Title Insurance

When buying a home, you might hear about the term “clean title” through a title insurance policy. Getting this clean title indicates that you will have a free and clear ownership rights to the property you are set to buy from the seller.

What then happens if legal or financial issues comes from the home sale? This is where title insurance comes in. A lender’s policy is a compulsory requirement to get approved for a mortgage these days.

What Is Title Insurance?

This is a type of indemnity insurance that helps to protect lenders and home buyers from financial loss gotten from defects in a title to a property. The most know title insurance is threw lender’s title insurance. It allows the borrower purchases to protect the lender.

Types of Title Insurance

There are basically two types of this insurance:

  • Lender’s title insurance
  • Owner’s title insurance which includes extended policies

Nearly all lenders need the borrower to purchase a lender’s policy. This can help protect the lender should in case the seller was not legally able to transfer the title of ownership rights. The lender’s policy simply protects the lender against loss.

There is always a need for an additional protection like the owner’s policy. This insurance which is often purchased by the seller helps to protect the buyer against defects in the title.

Lender’s Title Policy Coverage

Before purchasing a home, a lender will require the home buyer to purchase a lender’s insurance policy. This policy is not issued by the lender but a title company.

This insurance will protect the lender against potential losses if the seller is not able to transfer the title rights. Also, the lender is covered for the amount of the mortgage.

Owner’s Title Policy Coverage

When getting an owner title policy, you are protecting yourself from:

  • Cases of fraud or forgery
  • Flawed records
  • Undisclosed agreements that could reduce the value of the property on sale
  • Conflicting ownership claims
  • Lawsuits, liens, and other issues that would terminate the seller’s legal claim to the property

Title Insurance Cost

There is no fixed cost for this insurance, as it varies. It depends on the insurance provider and the state. Policies are usually under $3500 and as little as $500. You can negotiate with the seller to pay for your owner’s policy, and factor it into the sale of the home. Keep in mind that this insurance is a one-time fee.

Title Search

This is a customary part of home purchase. It is included in the cost of the insurance policy. Title search is a detailed review of public historical records such as deeds, court judgements, mortgages, wills, divorce decrees, tax records, and maps.

It is very important to check on this document as you can discover if there’s any title issues with the property you are about to buy. If the title search doesn’t indicate that the property is free and clear, then cases of such are called “title defects.”

Title Defects

If the home sale is complete and a force title claim comes up, then the company will help defend you in court. They are also required to pay the settlement owed to clear the title claim, as long as title defects is covered in the policy. Some common title defects are as follows:

  • Unpaid taxes
  • Property liens
  • Unknown or missing property heir
  • Property encroachments
  • Incorrect deeds
  • Property access issues


What Is a Title Search?

This is research of public records to determine property’s legal ownership. And also, to find out what claims are on the property.

What Is a Clear Title?

This is a title without any kind of impairment, lien, or levy from other parties that poses no question about your legal ownership.

SEE HERE: Best Guide On Mortgage Brokers Perth – Mortgage Calculator

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