Title insurance
is different from other types of insurance in that it protects you, the
insured, from a loss that may occur from matters or faults from the past.
Other types of insurance such as auto, life or health cover you against
losses that may occur in the future. Title insurance does not protect
against any future faults.
Another difference
is that you pay a one-time premium. A title insurance policy will protect
you from "risks" or undiscovered interests.
There are
two principal forms of title insurance:
-
The lender's
policy
-
The homeowner's
policy
What is a
Lender’s Policy?
A lender’s policy
protects the mortgage holder. If there is a fault in title that results
in a loss, the mortgage holder will be paid back.
What is a
Homeowner's Policy?
A homeowner’s
policy protects you, the purchaser, against a loss that may occur from
a fault in your ownership or interest you have in the property. You should
protect the equity in your new home with a title policy.
What does
a Homeowner’s Policy provide?
Protection from
financial loss due to demands that may be charged against the title to
your home, up to the cost of the title policy. Payment of legal costs
if the title insurer has to defend your title against a covered claim.
Payment of successful claims against the title to your home covered by
the policy, up to the cost of the policy. There are many title insurance
companies to choose from. Your attorney, escrow company, or real estate
agent should be able to help you make a decision.