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Standard vs Enhanced Title Insurance: What's a Homebuyer to Do?

Monday, November 23, 2020

When you buy a new home, your goal is to make that property suitable and beneficial for you. Being plagued with concerns that your property's title is vulnerable is therefore probably not ideal.

There are two kinds of title insurances that protect you from potential liabilities, which are the standard vs enhanced title insurance policies. This article provides all the information you need about the two so that you can make the best decision for your property. 

Do You Really Need Insurance?

This is a fair question that a lot of homebuyers do ask. You may be considering the fact that a lender's title insurance already exists, and that there is no need for an owner's title insurance as well. 

This, however, is unlikely to play out well for you. This is because a lender's insurance policy protects them, not you. Any issues that will arise regarding your property will still hurt you.

Investing in a home is a huge deal. It may have taken decades of saving and searching before you found the perfect one. What if you lose the property right after you purchase it?

What if, in addition to that, you also get your finances stripped? 

Title insurance may seem like an unnecessary additional expense, but in reality, it protects you from unforeseen circumstances that will damage your investment.  

Standard vs Enhanced Title Insurance

As their names may suggest, standard title insurance covers the general areas regarding issues that may arise, whereas enhanced title insurance covers those issues and then a lot more. 

Standard Title Insurance

Is somebody coming along to claim that you have no right to your property? Are you worried that the estate documents have not been properly completed or recorded?

Standard title insurance covers these issues. It also provides protection from other concerns that can be discovered by a bit of research on your part, such as defects or pre-existing debts and restrictive covenants. 

In general, standard title insurance covers issues arising from:

  • Documents that are not properly signed or recorded
  • Fears of other interested parties who may contest your claim to a property
  • The occurrence of fraud or forgery during the process of acquiring the property
  • There are liens surrounding your mortgage or deed of trust

Standard title insurance resembles a one-time purchase that will protect homebuyers throughout their time spent with the house. However, the insurance covers issues that occurred before the policy comes into effect. Since the standard concerns are relatively easy to discover and are likely to have arisen during the process of purchasing a house, the standard title insurance will be able to protect you against them. 

Standard title insurance is cheaper than enhanced title insurance because it covers for fewer conditions. The advice here is to judge based on your concerns. How likely do you think title issues will arise that won't be covered by a standard title policy?

If you are not that concerned, and your research so far hasn't come up with any red flags, going with this policy can be the best choice for you. This will prevent you from spending too much on something you don't need, while also staying reasonably protected. 

Enhanced Title Insurance

Enhanced title insurance covers an extensive list of possible issues that will open you up to financial loss because of property complications. 

What happens if your property extends beyond the acceptable space? What if your home violates building permits? These issues will no longer be something for you to worry about. 

How do you know if you would need enhanced title insurance?

  • From the get-go, there are complications regarding possible bankruptcy issues or legal problems with the property
  • You suspect that the construction of your property may cause future issues regarding building permits or space prohibition
  • You worry about potential legal or financial issues arising post-policy (after your title policy comes into effect)
  • You worry about forced removal of your property as a result of violations to public access

Among many others, an enhanced title insurance policy can cover these areas of concern. An important difference between standard vs enhanced title insurance is that the enhanced policy will cover issues that arise even after the policy becomes effective. This ensures maximum protection from a lot of issues that you may face. 

The catch is that enhanced title insurance will naturally cost more. However, if you find that you have a good reason to be concerned and would like to protect your finances and property from any possible unfortunate circumstances, then the added cost is worth it. 

Which One Should You Go For?

When comparing standard vs enhanced title insurance, it's safe to say that enhanced title insurance carries more benefits than losses. While it does cost you more, it protects you from a much more extensive list of possible vulnerabilities. If you do find that there is a reason to be concerned about issues that may arise in the future, enhanced title insurance is the best policy for you. 

In the end, the choice lies with you, and how vulnerable you think your property may be. Standard title insurance may suffice if there is a low perceived risk of forced removals, violations of building permits, and the like. On the other hand, if you go by a safety-is-the-best-policy mindset, enhanced title insurance will suit you.

We offer competitive prices for any insurance coverage. To learn more, contact us.

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