What is Title Insurance?

Title Insurance is an insurance policy that protects the holder from loss sustained by defects in title or the right to ownership of a property. When a property is purchased, mortgage lenders typically require the buyer to obtain title insurance. After a satisfactory title search and in exchange for a one-time premium, the title company insures the buyer against most claims to the title of the property.

Protection for the Purchaser of Real Estate

The purchaser of real estate needs protection against serious financial loss due to a defect in the title to the property purchased. For a modest, one-time premium, a buyer can receive the protection of title insurance. A title insurance policy will cover both claims arising out of title problems that could have been discovered in the public records, and those so-called “non-record” defects that could not be discovered in the record, even with the most complete search.

A title insurance policy will not only protect the insured owner, but also that persons heirs for as long as they hold title to the property, and even after they sell by warranty deed.

Protection for the Seller

The title insurance policy protects the seller from financial damage if the sellers title is rejected by a prospective purchaser. An owner of real property whose interest is insured by an owners title insurance policy has the assurance that the title will be marketable when selling the property.

Protection for the Lender

Majority of mortgage loans made in the United States are made by persons who are acting in a fiduciary capacity by savings and loan associations, savings banks, and commercial banks on behalf of their depositors, and by life insurance companies on behalf of their policyholders. These lenders are concerned with the safety of their mortgage investments because they are lending other peoples money. The lender is protected as long as the mortgage is not paid off.