Title Insurance

What Does Title Insurance Mean?

Title insurance is a form of indemnity insurance that protects against financial losses resulting from issues with a property’s title. It typically involves a one-time fee for coverage, usually paid when the property title changes hands. Title insurance is commonly offered as lender’s title insurance or owner’s title insurance.

Insuranceopedia Explains Title Insurance

Mortgage lenders often use title insurance to protect their investment and typically require the borrower to purchase it as a condition of the loan. This is because, if the borrower defaults on the mortgage, the lender will seize the property and attempt to resell it. However, if the borrower has unpaid bills to other parties, those parties may place a lien on the property. In such cases, title insurance would cover the cost of these liens, allowing the lender to sell the property. Lenders also set the bar for what other policies you need before closing, so it helps to compare the best homeowners insurance companies before settling on one.

A buyer may also choose to purchase title insurance to protect against any undisclosed issues with the property’s title. If the seller conceals problems, such as a hidden lien, title insurance would cover the buyer’s loss in the event of a dispute. Because title insurance is paid at closing along with several other costs, buyers often line up the rest of their coverage at the same time, and our guide on home insurance tips for first-time buyers covers what to look at during that process.