Title Insurance

In depth

Title insurance is a one-time premium paid at closing that protects the policyholder against losses from undiscovered title defects, including forged deeds, missing heirs, undisclosed liens, and recording errors. Owner's policies protect the buyer; lender's policies protect the lender or seller-financier. Misconception: title insurance is not the same as a warranty deed; it pays cash for losses, while a warranty deed gives a contract claim against the grantor. Practically, in seller-financed deals, both the buyer and the seller-as-lender should obtain policies. The buyer's policy is sized to the purchase price; the lender's policy to the loan amount. Title insurance is regulated state by state, with rates often set by statute. Always read Schedule B exceptions carefully; they list what is not covered.