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What is title insurance and why do you need it?

​Procuring a title insurance policy is critical when purchasing a house or piece of property.  A property title gives the owner the right to own and use the property.  Title insurance will defend against a lawsuit attacking the title or reimburse the insured for the actual monetary loss incurred up to the dollar amount of insurance provided by the policy.  It is a means of protecting yourself from financial loss if problems develop about the ownership rights to your home.

Title insurance differs from property and casualty insurance in that the greatest part of the title insurance premium dollar goes towards risk elimination; so, the theory of “loss prevention” is the “why” title insurance is important.  You pay for a title insurance policy once, there are no further premiums owed after settlement.

Examples of other title issues that can arise:

  • Errors or omissions in deeds
  • Mistakes in examining records
  • Forgery
  • Fraud
  • Falsification of records
  • Undisclosed heirs
  • Easement judgment
  • Divorce Issues
  • Unpaid child support lien

Title insurance protects you against these and many other “hidden” risks that may arise. There is no statute of limitation on a title insurance policy. ​

Gathering information on the property by completing a title search is where most of the title premium dollar goes. By searching, examining and clearing the title to your home before you buy it, your owner’s title policy offers protection for your property rights for as long as you and your heirs own your home. As property changes hands, mistakes, errors and/or omissions, often made long before you expressed interest in the property, can place your ownership in dispute.  The seller may have:

  • Avoided disclosure of using the property as collateral for an unpaid loan
  • Fraudulently claimed to be the sole owner
  • Failed to pay real estate taxes

Even a simple mistake in the recording of legal documents, improper execution of legal instruments or the reappearance of undisclosed or missing heirs can result in the loss of your property.

Having no title insurance exposes you to significant risk in the event a title defect is present.  If a property is purchased without title insurance, and a defect is later found, the cost of curing this defect rests solely with the home owner.