What Is Title Insurance?

Title insurance is a type of insurance that is generally purchased when an individual purchases a piece of property. It is a type of insurance coverage that is purchased from a title company. When an individual buys a piece of property, title insurance can be purchased to cover them and the lender.

Premium Amounts

Title insurance only requires one upfront payment. You do not have to continually make payments or renew your coverage. Once you purchase your title insurance, it is good for as long as you own the property. In some cases, the cost of the title insurance will be split by the buyer and seller of a piece of property.

What it Covers

There are a number of situations that can arise after you buy a piece of property that can be financially devastating. Without title insurance these circumstances could lead to big problems for the owner of the land. Title insurance is designed to protect the purchaser of a piece of property against any claims on the land. After title insurance is purchased, if anything comes up, the title company will pay to resolve the problem.

A number of things could happen that would make an owner's claim on a property illegitimate. For example, if it is determined that there was a judgment on a piece of property, the owner of the property could lose all of the money that was invested in that property as it is restored to its rightful owner. Another example of something that could go wrong is if the signatures on the deed were forgeries. This would be classified as fraud and it would result in the title not being transferred clearly to the new owner. 

Lenders also want this type of insurance coverage in order to protect them from certain circumstances as well. For example, if there is some type of mechanics lien or easement that is unrecorded on the property, it could negatively affect the status of the property. Lenders require purchasers to purchase title insurance in many cases so that their claims to the property will be protected. 

Advanced Coverage

Even though most title insurance policies cover a variety of circumstances, there are additional coverages that you could choose to add to a title insurance policy. This way, you will make sure that you are completely safe when you purchase a piece of property. Some additional things that you could choose to have covered are building permit violations from previous owners, structural damage as the result of mineral extractions and covenant violations that were made by previous owners of the property. There are a number of problems that you could run into and additional coverages make sure that everything is taken care of in advance.