What is Title Insurance, and why do people need it?

One of the expenses to buying a home is title insurance.  A home buyer purchases title insurance (Owner’s policy) to protect the most important investment he or she will ever make, a new home.  Title insurance is an indemnity contract issued by a title company that will reimburse the homeowner for a loss in the event someone asserts a claim against your property that is covered by the policy.

Title insurance costs vary depending on the value of the property but typically the homeowner will pay less than $1,000 for a $100,000 property.

Why is this necessary?

Title insurance is issued after a careful examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present.  Title problems may exist that cannot be disclosed in a search in addition to matters shown by public records.  For example, the following are a few common hidden risks that can cause a loss of title or create an encumbrance on title:

• Liens for unpaid estate, inheritance, income or gift taxes
• False impersonation of the true owner of the property
• Forged deed, releases or wills, Instruments executed under invalid or expired power of attorney;
• Undisclosed or missing heirs
• Mistakes in recording legal documents 
• Misinterpretations of wills
• Deeds by minors
• Deeds by persons supposedly single, but in fact married
• Fraud

What protection does title insurance provide?
Title insurance will pay for defending against any lawsuit attacking the homeowner’s title as insured, and will either clear up title problems or pay the insured's losses. For a one-time premium, an owner's title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.

How long does a Title Insurance policy last?

Owner’s title insurance lasts as long as you, the policyholder – or your heirs – has an interest in the insured property. This may even be after you have sold the property.

by Kevin Turner