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What is the Purpose of Title Insurance? Your Top 5 Most Common Questions Answered

Monday, March 23, 2020

Homeownership is a huge step for most people and you should be excited about finalizing your home purchase. On the final lap of the home buying process, it may seem as if costs just suddenly appear.

One such cost is that of title insurance. You may be wondering, "What is the purpose of title insurance?"

If you have to take out such a policy, you might have several questions. Take a look at the answer to some of these questions in this short guide.

What is the Purpose of Title Insurance?

The term title insurance refers to a type of insurance protecting those purchasing a home or those paying mortgages on a property. 

An owner’s policy is for those purchasing a home with cash while the lender’s policy protects mortgagees. Based on the extent of the policy, title insurance will protect the person insured from financial loss. It also protects from any legal obligations as a result of title defects, concealed liens or other issues outlined in the policy.

How does an Owner’s Policy Differ from a Lender’s Policy?

An Owner’s Policy is bought by the person selling the house for the one buying it. A Lender’s Policy is purchased by the mortgage borrower for the mortgage lender before the loan is issued.

The beauty of having both types of title insurance is that they protect you from almost every financial strain and any legal burden caused by unexpected issues with your title. For a Lender’s Policy, it normally covers a portion of the loan and decreases as you pay the loan.

What Does the Policy Cover?

As a homeowner, your policy gives you protection from blunders made in public records or title search. Any issues that surface from a title search will be catered to by your insurance.

If you find yourself in a situation where you need to defend your title, have costs to negotiate with third parties or need to pay legal fees it will all be covered under your insurance.

What is not Included in Your Policy?

Depending on your insurance, some risks are not covered. Two notable types are any discoveries made during a property inspection and any title issues that you know about.

Why Should You Get Title Insurance?

As a homeowner, it grants you certain privileges. These include being able to use and enjoy your home without any unexpected restrictions. It also offers freedom from financial burden due to concealed title issues.

Beneficial to You

Now you know the answer to the question, "What is the purpose of title insurance?" In order to determine the benefits of title insurance, you must know why it is important to you and what it covers. 

Once you understand everything you can gain it will become obvious that there is nothing to lose if you choose to get this type of insurance.

If you would like more help with choosing insurance policies please contact us. We are ready to help you select the right policy for your needs.

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