What is Title Insurance and Why Do You Need It? 

Among the more misunderstood areas of real estate transactions are questions about the need for and the cost of title insurance. Your clients may question what exactly is title insurance and why do I need it? 

Simply put, title insurance protects real estate owners and lenders against any property loss or damage they might experience because of defects in the title to the property. When a property is financed, bought, or sold, a record of that transaction is generally filed in public archives, along with other events that may affect the ownership of a property, like liens or levies. 

While a title search does due diligence during any property transaction, mistakes can be made and things can be missed. After all, a home or property may have been owned by numerous people stretching back a century or more. 

What Does Title Insurance Protect Against?

The title company searches public records to determine the property’s ownership status and to find – and remedy, if possible and necessary – several types of ownership issues. Title insurance protects from these unforeseen legal and financial title discrepancies, as well as the costs, attorney’s fees, and expenses of defending against those defects insured by the policy. Likewise, title insurance can protect a homeowner from financial loss if the sale of the home falls through due to a covered defect in the property’s title.  

Because for many people the purchase of a home is the largest single investment that they will make, it makes sense to protect it. Just like a homeowner’s policy can protect against loss from theft or fire and wind damage, the home title insurance protects from hidden title hazards that threaten the owner’s financial investment in the home. 

What is the Difference Between an Owner’s Policy and a Lender’s Policy?

There are two different types of title insurance – an Owner’s Policy and a Lender’s Policy. An Owner’s Policy is purchased to protect the home buyer, while a Lender’s Policy is purchased on behalf of the lender before the home loan is issued.  Both types of title insurance policies ensure a clean and clear title, protecting the insured from the financial and legal burdens of unforeseen title issues. 

Why is Title Insurance Important?

Title insurance is unusual in that it protects you from losses caused by errors that may have occurred in the past, while most insurance products protect a homeowner from losses incurred if something happens in the future. Real estate is too big of an investment to leave the validity of your ownership to chance.

  • Protects ownership rights from possible errors, and from future claims or undiscovered interests. Such errors and claims might include forgery of deed documents, fraud, and mistakes in public records.
  • Protects the homeowner from unforeseen legal and financial title discrepancies, as well as the costs, attorney’s fees, and expenses of defending against any matter insured by the policy.
  • Protects construction of a new home, which has the potential for exposure to unique pitfalls. It is likely that there were numerous owners of the unimproved land over the years who may seek to claim ownership rights. There is also the potential that the home’s builder failed to pay subcontractors or suppliers during the construction of the home, which could result in a lien being placed on the property. 

At BesTitle, we stand out from others in our industry because we provide genuine, professional services to each of our customers and take great pride in offering exceptional communication. Contact us today for help with your title service needs.

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