How Title Insurance Works

Title insurance is a type of insurance that protects lenders and homebuyers against financial loss caused by defects in a property's title. The cost of paying undisclosed liens or protection from lawsuits brought against you by someone claiming rights to the property can be covered by the owner's title insurance. To select the best title insurance service, you can get an instant estimate.

Property insurance does not protect homeowners from all possible infringement of their property rights. For example, it does not protect you from property problems caused by your own actions.

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This protects against problems that could affect your decision to buy the property if you knew about it at the time. You may care less about how the lender's policies work because they don't protect you. But you can still be curious because you have to pay for it.

Suppose you lose your home because your property has been fraudulently sold. You stop paying the mortgage and the lender will then file a claim with their insurance company to recover the mortgage.

Here are some of the issues that ownership policies can cover: 

  • Boundary disputes

  • Errors on the property deed

  • Building code violations by a previous owner

  • Property survey errors

  • Claims related to a forged power of attorney

  • Claims by an ex-spouse who didn’t authorize the sale

Lender property insurance is required, but owner property insurance is optional. Owner policies can protect you against loss of equity and right of residence if a claim arises after purchase.

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