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Home Title Insurance VS Homeowners Insurance: What's the Difference?

Monday, July 12, 2021

You might fall in love with a house at first sight, but it’s what happens in the long term that matters. That’s why the conversation about insurance should take place before you get the keys to your new home.

And it usually does because as soon as you're under contract, you should secure your homeowner's insurance.

There's another type of insurance you should consider — home title insurance — a service handled by the company taking care of your closing. It will be tempting to say, "no thanks, I'm already covered," but before you do, take a minute and read through this article.

Here is what you should know about the differences between homeowner's insurance and title insurance.

Home Title Insurance 101

Imagine the excitement of moving into a new home. You have the right to paint the walls any color you please. You also have the right to live in your home.

home title insurance policy protects a homeowner from a variety of situations that could impact their right to remain living in their home, including, but not limited to:

Title insurance protects the buyer from financial loss if any covered situation arises after closing on the property. This insurance also offers legal protection to the buyer.

What Is Homeowner's Insurance?

Sometimes a homebuyer confuses home title insurance and homeowner's insurance. It's nothing to feel ashamed of, considering the many pieces of information you field when buying a home. 

Homeowner's insurance protects a homeowner financially if their home suffers damage due to an accident or disaster. Personal belongings, such as furniture, electronics, and clothing, are also covered.

Typically, a homeowner's policy covers the homeowner's liability should an accident occur on their property where someone else is injured. 

This type of insurance doesn't automatically cover floods or earthquakes. The homeowner can purchase riders that cover these disasters at an extra cost.

A homeowner's policy usually won't cover damages to the home caused by poor property maintenance.

Do You Need Both Types of Insurance?

We've answered two questions: what's the difference between the two types of insurance, and what do they cover?

Most buyers will question the necessity of having home title insurance and a homeowner's insurance policy. In short, you need both policies.

It's a bit like discussing the need for both soap and water. You can get somewhat clean with only water, but add some soap, and you'll be fully covered for cleanliness.

Like soap and water, these two types of insurance do different things, but they complement each other by offering a homeowner full protection of their investment against unforeseen circumstances.

Need Help Purchasing Your Policy?

As part of the home buying process, your title company will ask you whether you're planning to purchase a home title insurance policy. Now that you know a little more about what the insurance covers, you're likely ready to choose your policy. 

The experts at Heartland Abstract can help you purchase the policy designed to serve your needs best. Contact us today, and one of our knowledgeable team members will be happy to assist you.


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