Both a lender’s and owner’s title insurance policy pay valid claims and legal fees necessary to defend against hidden title issues, but also decrease ownership risks by providing a thorough title search prior to the issuance of either policy.

An owner’s title insurance policy protects the rights of the homeowner for as long as they or their heirs have an interest in the property.

A lender’s title insurance policy protects the bank or other lending institution for as long as they maintain an interest in the property, which is typically until the loan is paid off. A lender’s policy is required by most lending institutions as a way to insure their security interest in the property.

Title insurance is designed to provide real property owners and lenders, and others with interests in real estate, the maximum protection from adverse title claims or risks. Title insurance affords protection both in satisfying valid claims against the title as insured and in defraying the expenses incurred in defending such claims.

What is title insurance? Title insurance is:

• An assurance against loss and indemnifies the insured against actual loss should the title to the property insured not be as stated in the policy
• An agreement to defend the insured’s title against an attack from parties claiming rights that have been insured by the policy coverage
• An agreement to compensate the insured for actual losses suffered under covered title risks

What does title insurance not insure? It does NOT insure:

• The market value of the property
• Acreage, square footage or area of the property
• The property address

Next month we will review some of the different types of owner’s and lender’s policies.