What is title insurance?
Title Insurance is a contract of indemnity between the insured and a title insurance company. The form of this contract is set by the Texas Department of Insurance and is commonly called a title insurance policy. Should title, as insured, to the land or affecting the lien of the mortgage be challenged, the title insurance company has several options to fulfill its obligations to the insured under the title insurance policy. These options include paying the claim, initiating all necessary legal proceedings to clear the title to the property, indemnify the insured, reinsure at current value without making exception to the covered title risk, indemnify another title insurer that reinsures the title without making exception to the covered title risk, secure a release of the covered title risk, or take a combination of these actions. The maximum liability under the policy is limited to the amount of insurance shown in the policy.
Title insurance provides coverage for things that may have happened in the past; as compared to automobile insurance or homeowner’s insurance that provide coverage for things that may happen in the future. Examples of possible title problems include undisclosed or missing heirs or improper deeds. More examples are listed below.
Title insurance is a contract to indemnify against losses arising through defects in the title to real estate. If the title is insurable, the company guarantees against loss due to any defects in title not specifically set forth in the policy. It also pays all expenses in defense of any lawsuit attacking the title as insured.
Unlike most insurance which protects against future events, title insurance protects against things that have occurred in the past. Title insurance protects you in the event there is a claim or loss against your ownership interest to the property. The policy contains information regarding the condition of your ownership rights to a piece of property. It provides you with a peace of mind to take the risk out of acquiring property whose legal history is unknown to you. For a one time premium you can receive a policy to protect against title defects or claims against the property and it can even protect you after the property has been sold.
