What is Title Insurance?

Title insurance protects you from financial loss and related legal expenses in the event there is a hidden defect in the title to your property that is covered under the policy. Title insurance focuses on risk prevention rather than risk assumption. Title examiners review the history of the property and strive to eliminate title issues before the property is purchased. The cost of title insurance is a one-time premium paid at closing. Some examples of title defects covered by an owner's policy of title insurance are mistakes in recording or indexing, missing heirs, unpaid taxes, unpaid judgments, unpaid liens, unpaid assessments and unreleased mortgages. The cost of title insurance generally is related to the value of the property. An owner's title policy protects the purchaser from covered title defects that existed prior to the date of the policy. A lender's policy ensures that the lender has a valid lien on the property. Most lenders require borrowers to purchase a lender's policy of title insurance.