400 Creekside Drive, Suite 407-409 Pottstown, PA 19464

What’s Included (And What’s Not) By Title Insurance Coverage

Friday, November 12, 2021

In 2021, over 634,386 houses were sold. There's no doubt, the housing market is hot right now. It's also highly likely that most, if not all, of those homes purchased, also came with the requirement of title insurance. 

If you're in the market to buy a home, there's a whole lot to learn about the home buying process. Title insurance coverage might be something many homebuyers aren't familiar with if they haven't bought a house before. You might wonder why you need homeowners insurance and title insurance too? 

If title insurance is an insurance policy, what does it cover? Read on to learn more about title insurance coverage when you buy a home. 

What Is Title Insurance?

Title insurance is an insurance policy that is typically required by mortgage lenders. The title company does a search on the home being purchased to make sure it's a clean title and ready to be transferred from one owner to another. 

Yet, sometimes, surprises arise with titles after the home sale has already occurred. The mortgage lender almost always requires you to pay for title insurance so their interests are protected. 

If a homeowner wants title insurance, they have to seek separate coverage to protect their interests from the policy for the mortgage lender. 

What Does Title Insurance Cover?

So, why might you want to get title insurance? Even with the most careful searches done on the title of the home, surprises can arise. Sometimes those don't come up for months or years after the sale of the home has occurred. The title insurance helps to protect against those surprises.  

What will title insurance protect against?

  • Forgery
  • Fraud
  • Improper execution of documents 
  • Judgment and liens that are unpaid
  • Mistakes in recording or indexing legal documents
  • Undisclosed or missing heirs
  • Unpaid assessments
  • Previous mortgages that haven't been released
  • Unpaid taxes

 Again, it's important to note that the title insurance required at closing protects the mortgage lender. If you're the homebuyer, you'd need to seek owner's title insurance

What's Not Covered With Title Insurance?

It's important to not, like every other kind of insurance, not all title insurance policies are the same. You'll want to look closely at whichever policy you select to see specifics. 

Having said that, there are generally some items you can assume won't be a part of the title insurance policy. This include:

  • Defects created after the issuance of the policy, or defects created by the buyer
  • Issues that come up as the result of failing to pay your mortgage
  • Issues that come up as the result of failing to obey the law 
  • Specific taxes and assessments
  • Violating zoning or building ordinances related to land use, improvements, or environmental protection
  • Condemned land
  • Claims from others who might have rights to your property if there's a body of water on the property

When you seek title insurance, it makes sense to not only ask what's covered but to also ask what's potentially not covered.

Know What Your Title Insurance Coverage Provides 

Homes often go through multiple owners over the course of their life. Title insurance coverage helps to protect both lenders and homeowners from the history and people who are connected to the property.

If you need title insurance or want more information about coverage, we can help. Contact us today and we can answer questions, as well as provide you with a rate quote.

View All Recent Posts