What is Title Insurance? Do you need it?

When you buy property, whether it’s a new home, land or other real estate, the title is the legal evidence that the property now belongs to you. During the course of the sale, an extensive title search will usually be conducted to ensure that the person selling the property has the right to transfer it, and to ensure that any outstanding claims against it, such as liens, mortgages, or easements are fully disclosed. Because the system of recording titles in the US is not always completely accurate, disputes regarding property titles can arise, jeopardizing the new owner’s claim to the property in question.

An owner’s title insurance policy protects the buyer against any potential disputes that may arise from insufficient or inaccurate title disputes. The title insurance company issues a policy after a comprehensive title search has been conducted, typically offering coverage in the amount of the purchase price paid. Many times, the title insurance company is chosen “by default” by a mortgage broker or realtor, and many buyers don’t realize that there are other options out there. While the premium for title insurance is usually paid only once, at closing, the differences in costs from one insurer to the next can be significant. As with any insurance purchase, it’s advisable to consider all your options and choose the title insurance policy that best suits your needs.

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