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Standard vs Enhanced Title Insurance Near Me: What To Know

Monday, December 27, 2021

Did you know that title insurance is a necessary purchase for homeowners in the US? It's important to protect your home against damage or loss due to fire, wind, hail, and other natural disasters.

But do you know there are different levels of insurance coverage?

Homeowners are confused about the difference between standard and enhanced title insurance. You will be surprised at how much money you can save by knowing the difference between standard and enhanced title insurance.

Read on to learn more about standard vs enhanced title insurance near me.

What is Title Insurance?

Title insurance was created to protect the lender's interest in the property. Yet, it also serves as buyer protection for those who purchase homes. Title insurance does two main things:

• Provides a guarantee that the person selling the home has full ownership of it
• Assures that there are not any unknown or hidden claims on the property

Who Needs Title Insurance?

When you go through foreclosure, your home goes into possession by the lending institution and then goes up for auction. If no one bids on it, you'll get it back.

At that point, the title to your home is clouded, and the only way to clear up the problem is through an expensive process called Quiet Title.

If you've ever dealt with a title problem when trying to sell a home, you know how frustrating this can be. It can cause major delays in selling or buying a property.

Unfortunately, this is common with foreclosures, short sales, and other legal issues that arise during difficult financial times.

To help prevent these situations from happening in the future, lenders need everyone investing in real estate to have title insurance.

What Types of Title Insurance Are There?

There are typically two different types of insurance: standard and enhanced. Standard title insurance is usually sufficient for most individuals, but it's good to know the differences between the two, in case you ever need a more robust policy.

Enhanced Title Insurance

The enhanced title insurance provides coverage for everything that could be found on a property at the time of sale. This includes claims made by previous owners and those with liens against your property.

Besides providing complete coverage, it also protects against errors not yet discovered or those revealed after purchase. This can include those who have missed mortgage payments or tax bills.

If another individual has been making these payments for them, they might come after you for repayment of those funds.

Standard Title Insurance

Standard title insurance only covers financial interests involving the property. Thus, it doesn't cover all problems with a home or any claims made by previous owners.

It also doesn't cover items found after closing, even if they were previously unknown to buyer and seller. Standard title insurance is similar to getting fire insurance in your new car.

It's the minimum required coverage needed to make sure the deal goes through with no problems.

Why Do I Need Both Types of Title Insurance?

You will want an enhanced title policy if there are any questions about the legality of ownership of your home.

For instance, if someone else is on the deed, then an enhanced policy would help protect you from any claims made by that individual.

What Does the Premium Cost for Title Insurance?

The amount of your premium depends on several factors:

• Property location
• Size
• Current market conditions
• How many times the home has been sold

For example, if this is your second or third time buying or selling your home, it might not cost as much because there will be fewer unknowns.

However, if you're purchasing a new construction property or one that's never been sold, you might pay more for an enhanced title policy.

Title Insurance Costs

Here is a breakdown of the average title insurance cost:

Standard Title Insurance: Premium costs range from 0.5% to 2% of the home's value, depending on who issues it and your location.

Enhanced Title Insurance: Premiums can range from 1% to 5% of the home's value, depending on who issues it and your location.

What Does My Title Insurance Cover?

Both types of title insurance protect you, your lender, and others with interest in the property against risks.

This includes forged documents, undisclosed heirs, outstanding liens, and unpaid mortgage payments. However, an enhanced policy also covers items such as taxes that might not have been paid correctly.

It's also good at combating any mistakes made by a public official during recordings, such as wrong names or incorrect spelling of names.

For example, if another individual is listed as your property owner, you will not clear up this issue unless you purchase an enhanced title policy.

Can I Use the Same Title Insurance Company for All of My Properties?

You can buy a single, comprehensive policy for all of your properties or have different companies cover each property. But remember, the name of the owner should be written correctly.

However, it's crucial to keep a list of your first and last names and previous owners on the deed. This way, you can avoid potential confusion when filing documents with county offices.

Standard vs Enhanced Title Insurance: Who Needs It?

Typically, standard title insurance is sufficient to protect your interests if you're purchasing residential real estate that you'll own and occupy yourself. However, if you're buying a rental property, an enhanced policy should be considered.

Just remember that even though both policies offer benefits, only one offers 100% coverage of your most important assets.

Standard title insurance is limited to land and structural items, while enhanced protects against natural disasters and other events beyond the control of home purchasers or renters.

Both are backed by the full faith and credit of the state they were issued in.

Therefore, ask your agent about an enhanced policy to get complete coverage if you want rental property purchase protection.

Get the Best Title Insurance Near Me Now

Are you planning to buy a home and need guidance on title insurance selection? Choosing the ideal home title insurance is difficult, but don't worry because we're here for you.

At Heartland Abstract, our skilled experts will help you choose the best title insurance near me without charging any agency fee. Get in touch with us now for a swift and smooth transaction.

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