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Choosing Between a Standard vs Enhanced Title Policy

Monday, May 9, 2022

Buying a home can be a complicated process. You sign so many papers and hear terms you may not completely understand. An important term that comes up at closings is "Title Policy."

What is a title policy, and why is it important to your home? Great questions! We will provide the answers below, so keep reading to find out more. 

What Is a Title Policy?

A title insurance policy is a policy that assures you that you are the actual owner of your home when you buy it. It helps you know that your mortgage is the only one on the property, and you have a clear title.

It also helps to protect the buyer from a fraudulent seller. The policy enables the buyer to know that the house owner is the legitimate owner of the house.  

Buyers can also see that no association dues are owed on the house and that there aren't property easement disputes. There are many title problems than can come up after purchasing a home. 

Many people have heard of title insurance, but they may not realize that there are two types: standard title insurance and enhanced title insurance.

Standard vs Enhanced Title Insurance

Choosing a policy for your title insurance means understanding the differences between standard and enhanced policies. Standard is similar to a cop who will keep you safe if you need him. 

Enhanced is like a Secret Service agent who is always there to watch over you from the unexpected.

Standard Policy Coverage

Standard policies will cover the basics in any transaction where you exchange titles on property. They can be bought by the owner or the buyer depending on the state's requirements and their preferences.

Standard policies will vary based on the area you live in and the state's specific requirements. However, there are some basics that they cover:

  • Mistakes in the recording of the documents
  • Unknown heirs claiming that the property is theirs
  • Fraudulent dealings by the current title holder
  • Covenants that apply and aren't recorded properly
  • Public record mistakes 
  • Outside claims against you owning the property 

These are necessary and should be part of any buying or selling of property. Standard policies are the basics of coverage for the title.

Enhanced Policy Coverage

Enhanced title policies go further with their coverage. They not only include all the standard policy coverages, but they add additional coverages for other possible circumstances. 

  • Includes those who inherit property from the owner
  • Covers other liens against the property like a mechanic's lien
  • Increases value of coverage with a property value increase
  • Zoning problems with the property are covered
  • Covers encroachment problems onto covered land
  • Covers losses from subdivision violations
  • ETC...

Enhanced policies will often cover over 25 more protected areas for your property! 

One of the best aspects of an enhanced policy is that it grows with your house value. The policy will increase as your home increases in value, which is a massive benefit if you live in the home for an extended period.

Tips for Choosing a Policy

When you are closing on your home, you can choose between a standard policy or an enhanced policy. The decision is yours to make, and the best decision comes down to your needs and desires.

Get the Details

When you are offered a title policy, ask questions about what it covers and what it doesn't. Different companies will offer different types of coverages, so you want to see what they say they will cover.

Check Other Options

You can check other options for title insurance to see whether you get a standard or an enhanced policy. Just because your agent or a lawyer offers one policy doesn't mean you have to take it.

You have the right to shop around for the best coverage at the best rates for yourself. 

Your Risk Tolerance

The main factor determining which policy to get comes down to your risk tolerance. You can get standard coverage if you feel like your property is solid and won't have any issues.

If you want to have peace of mind over all the possible scenarios that could happen to your property, enhanced is best. 

The Future and the Growth

One of the best aspects of an enhanced policy is its ability to be passed on to your heirs. If you plan to leave your house to your children or someone you care for, enhanced insurance will also help them.

If you think your home will grow in value significantly, remember that an enhanced policy is the only one that grows in coverage. 

Why an Enhanced Policy May Be Worth the Extra Cost

Policy costs are a factor in picking the right title policy. It would help if you understood that the enhanced policy would be more expensive because you have more coverage.

The average enhanced policy is, on average, about 10% more expensive than a standard policy. Remember that the price is a one-time fee and not a monthly payment. This makes the addition of enhanced coverage very affordable in the long term.

When looking at two policy options, get the detailed coverage lists of each policy and get the pricing upfront. This will help you to compare the options and make the best decision for yourself.

The Safety of Your Home

Getting the right title policy is how you add another level of safety to your home. You want to protect your home and your ownership of it for years to come. The right title policy can help you feel safe with your new home.

Heartland Abstract has brought simple independent title insurance back to the market. We aren't connected to a real estate company and don't charge hidden fees to make extra money.

Our passion is clear upfront coverage and honest communication. Contact us and find out how we are redefining the title insurance process. 

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