What
is Title Insurance?
Title
insurance is different from other types of insurance in that it
protects you, the insured, from a loss that may occur from matters
or faults from the past. Other types of insurance such as auto,
life or health cover you against losses that may occur in the
future. Title insurance does not protect against any future faults.
Another difference is that you pay a one-time premium. A title
insurance policy will protect you from "risks" or undiscovered
interests.
There
are two principal forms of title insurance:
-
The
lender's policy
-
The
homeowner's policy
What
is a Lender’s Policy?
A
lender’s policy protects the mortgage holder. If there is a fault
in title that results in a loss, the mortgage holder will be paid
back.
What
is a Homeowner's Policy?
A
homeowner’s policy protects you, the purchaser, against a loss
that may occur from a fault in your ownership or interest you
have in the property. You should protect the equity in your new
home with a title policy.
What
does a Homeowner’s Policy provide?
Protection
from financial loss due to demands that may be charged against
the title to your home, up to the cost of the title policy. Payment
of legal costs if the title insurer has to defend your title against
a covered claim. Payment of successful claims against the title
to your home covered by the policy, up to the cost of the policy.
There are many title insurance companies to choose from. Your
attorney, escrow company, or real estate agent should be able
to help you make a decision.