What is Title Insurance?
- Title Insurance insures against events that happened in the past that affect title to the property.
- The title company agrees to defend the title or pay losses the Insured may suffer if the title is challenged or defective.
The word title is a collective term for all your legal rights to own, use and dispose of land. Title includes all previous ownership, uses and transfers. In order to insure the transfer of real estate property, a title search must be performed. Title insurance protects against the possibility of future loss should your legal rights to your property be challenged.
There are two types of title insurance: a lender’s policy and an owner’s policy. The lender’s policy protects the lender’s interest in the property for the amount of the mortgage loan. An owner’s policy typically protects the home-buyer for the purchase price. While a lender’s policy is often required to grant a mortgage loan, an owner’s policy is typically optional.