What is Title Insurance and Why Do You Need It?

What is Title Insurance?

Generally, a person thinks of insurance in terms of the payment of future loss due to the occurrence of some future event. For instance, a party obtains automobile insurance in order to pay for future loss occasioned by a future “fender bender” or for the future theft of the car. Title insurance is a unique form of insurance. It provides coverage for future claims or future losses due to title defects which are created by some past event (i.e., events prior to the acquisition of the property.) These risks are far less obvious than those protected against by automobile insurance, but can be just as devastating. The following information will answer some commonly asked questions about title insurance.

Why Do You Need Title Insurance?

To protect possibly the most important investment you’ll ever make- the investment in your home.

With a title insurance policy, you as owner, have an indemnity contract that will reimburse you for loss in the event someone asserts a claim against your property that is covered by the policy.

How Can There Be a Title Defect if the Title Has Been Searched?

Title insurance is issued after a careful examination of copies of public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.

What Does Title Insurance Protect You Against?

Here are just a few of the most common hidden risks that can cause a loss of title or create an encumbrance on title:

False impersonation of the true owner of the property.
Forged deed, releases or wills, Instruments executed under invalid or expired power or attorney; Undisclosed or missing heirs; Mistakes in recording legal documents.
Misinterpretation of wills.
Deeds by persons of unsound mind.
Deeds by minors.
Deeds by persons supposedly single, but in fact married.
Fraud.
Liens for unpaid estate, inheritance, income or gift taxes.

What Protection Does Title Insurance Provide Against Defects and Hidden Risks?

Title insurance will pay for defending against any lawsuit attacking your title as insured, and will either clear up title problems or pay the insured’s losses. For a one-time premium, an owner’s title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.


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