What types of Title Insurance exists?
There are two types of title insurance policies: Owner’s or Borrowers policy and Lender’s or “Mortgagee’s” policy. An Owner’s Policy is issued in the amount of the purchase price and insures the title to the property for as long as the owner or their heirs own the property or have liability through warranties of title. A Mortgagee’s Policy insures the lender in the amount of the loan against the invalidity or unenforceability of the new mortgage. The policy decreases as the loan is paid down and expires upon payment in full of the loan. Separate title insurance policies protect different interests. Individuals assuming that they are adequately covered without the protection of title insurance may learn a costly lesson. It is important to know that the mortgagee policy does not provide coverage for the owner. Also, a prior owner’s policy will not protect a new buyer. Consider, for example what would happen if upon the purchase of a new home the buyer were to rely on their seller’s owner
