What Is Title Insurance?

Posted on | November 30, 2016

dreamstime_m_36503508_Protect_PropertyDifferent from other types of insurance that protect you against losses that may happen in the future, title insurance protects you, the insured, from matters or faults that occurred in the past that may affect your property.

Close scrutiny by the title company of property related recorded documents aids in the elimination of many possible hidden risks that can undermine the validity of title ownership. While the possibility of unidentified risks still exist after a transfer of title, the purchase of a title insurance policy protects the lender and buyer from invalid claims made against the title of a property, such as encumbrances and liens.

Two common types of policies are an “owner’s policy,” which covers the home buyer for the full amount paid for the property. There is also a “lender’s policy,” which covers the lending institution over the life of the loan. Typically, the owner’s policy is paid for by the seller and the lender’s policy by the buyer.

Types of ALTA (American Land Title Association) Policies

In general, there are two basic types of title insurance policies.

  • Owner’s Policy: An owner’s policy helps protect your rights as the homeowner for as long as you or your heirs own the property. Typically, the seller purchases the owner’s policy for the buyer.
  • Lender’s Policy: When you get a mortgage loan, your lender will require title insurance. A lender’s policy protects the bank or lending institution for the life of the loan.

Either type may be in the form of standard or extended coverage.

To learn more about AmeriTitle’s title and escrow services, click here to view our Client Resource Guide.

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