What is title insurance?
Title insurance provides the lender and the buyer (if you purchase owner’s coverage) with coverage for losses resulting from specific title defects listed in the policy. In cases where land and property have changed hands over time, there is always the possibility an error has occurred. If an error has occurred, it may be that someone else may be in title to or have an interest in the property that improvements encroach on property lines or that other similar problems may exist. In these scenarios, if you do not have title insurance you could lose your investment in your home. Lenders require “lender’s coverage” to protect their investment and it only protects the lender. Owner’s coverage is optional and provides separate coverage for the borrower.
There are two kinds of Title insurance – a lender’s policy and an owner’s policy. When you purchase an owner’s policy of title, it protects you, the property owner, against problems affecting the title to your property and its marketability. (You probably have several forms of insurance already. And you are probably familiar with insurance coverage on your automobile, life insurance and medical insurance). The lender’s policy protects the lender as the insured policy holder. Without owner’s title insurance, buyers are at risk since they have no rights to make claims under the lender’s insurance policy. Only the owner’s policy protects you in the event of a lawsuit or claim.
Title insurance provides the lender and the buyer (if you purchase owner’s coverage) with coverage for losses resulting from specific title defects listed in the policy. In cases where land and property have changed hands over time, there is always the possibility an error has occurred. If an error has occurred, it may be that someone else may be entitled to or have an interest in the property, improvements may be encroaching on property lines or that other similar problems may exist. In these scenarios, if you do not have title insurance you could lose your investment in your home. Lenders require ‘lender’s coverage’ to protect their investment and it only protects the lender. Owner’s coverage is optional and provides separate coverage for the borrower.
