What is Title Insurance?

Why Do I Need Title Insurance?

Title insurance is a one-time charge assessed at settlement. It protects a homebuyer in the event that the property title — which proves ownership — is flawed. Problems can include outstanding mortgages or liens, easements, inaccurate notary acknowledgments and deeds, or wills and trusts with wrong names or improper vestings.

Unlike typical insurance that protects against future events, title insurance addresses historical problems that may not have been discovered before your purchase. The financial stakes are substantial — potential losses can range from hundreds of thousands to millions of dollars. Without owner's title insurance, you bear all legal costs and risk losing your property if a title dispute arises.

Standard vs. Enhanced Policies

Standard Policy

Covers issues that should have been identified before closing — forged documents, liens, undisclosed heirs, and other pre-purchase title defects. Sufficient for most transactions.

Enhanced (ALTA) Policy

Approximately 20% more expensive. Includes all Standard protections plus post-closing concerns like adverse possession, prescriptive easements, and living trust coverage. Covers issues like improvements built without permits.

Owner's Policy vs. Lender's Policy

Owner's Policy

Protects the homebuyer against losses from ownership faults or interest issues in the property. Stays active as long as you (or your heirs) own the property. Covers legal fees for defending claims.

Lender's Policy

Protects the mortgage holder's financial interest. Required by virtually all lenders. Expires when the loan is paid off. When you refinance, a new lender's policy is required.

What Risks Does Title Insurance Cover?

False impersonation of the true owner

Forged deeds, releases, and wills

Deeds by persons of unsound mind or minors

Fraud and undisclosed heirs

Invalid documents executed by expired attorneys

Claims for unpaid estate, inheritance, and gift taxes

Unrecorded easements and restrictions

Deeds delivered after grantor's death

Fraudulent impersonations

Invalid divorces affecting property rights

Did you know? According to ALTA surveys, title problems arise in one out of every four real estate transactions. Title insurers paid over $460 million in claims in a single year. Owner's title insurance is the only protection that fully covers buyers if a title problem surfaces after closing.