Title Insurance.
It’s a term we hear and see frequently. If you’ve purchased a home before, you’re probably familiar with the benefits of title insurance. But if this is your first home, you may wonder, “Why do I need another insurance policy? It’s just one more bill to pay.” The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and your mortgage lender, want to make sure that the property is indeed yours—lock, stock and barrel—and that no individual or government entity has any right, lien, or claim to your property. Title insurance companies are in business to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are protected to the maximum degree.
Types of Policies and Risk Elimination
Title companies routinely issue two types of policies:
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Owner’s Policy: Covers you, the homebuyer.
- Lender’s Policy: Covers the bank, savings and loan, or other lending institution over the life of the loan.
Both are issued at the time of purchase for a modest, one-time premium. Before issuing a policy, the title company performs an extensive search of relevant public records to determine if anyone other than you has an interest in the property. With such a thorough examination of records, any title problems usually can be found and cleared up prior to your purchase.
Protection and Benefits
The fact that title companies work to eliminate risks before they develop makes title insurance decidedly different from other types of insurance. Most insurance assumes risks for unforeseen events (like fire or theft). The purpose of title insurance is to eliminate risks and prevent losses caused by defects in title that happened in the past. Once a title policy is issued, if for some reason any covered claim is ever filed against your property, the title company will:
- Pay the legal fees involved in defense of your rights.
- Pay any covered loss arising from a valid claim.
That protection is in effect as long as you or your heirs own the property, all for a single, one-time premium paid at the time of purchase. Buying a home is a big step emotionally and financially. With title insurance, you are assured that any valid claim against your property will be borne by the title company, and that the odds of a claim being filed are slim indeed. Isn’t sleeping well at night, knowing your home is yours, reason enough for title insurance?
