Title Insurance Policy Explained

If you’re buying a new home or property, you may have heard of title insurance. But what exactly is it, and why is it important? In this article, we’ll explain the basics of title insurance policies, including what they cover, how they work, and why you may need one.

What Is Title Insurance?

Title insurance is a type of insurance policy that protects home buyers and mortgage lenders from financial losses related to unexpected defects or issues with a property’s title. A property’s title is the legal document that proves ownership of the property, and it can be affected by a variety of issues, including:

Title Issues
Outstanding mortgages or liens
If the previous owner didn’t pay off their debts, these debts can become your responsibility when you buy the property.
Forgery or fraud
If someone knowingly or unknowingly forges a document related to the title of the property, it can affect your ownership of the property.
Boundary or survey disputes
If there are any disagreements about the property’s boundaries or surveys, it can affect the legitimacy of its title.
Clerical errors or mistakes
If there are any errors or omissions in official records associated with the title, it can potentially cause problems with ownership.

When you buy a property, your lender will typically require you to purchase a title insurance policy to protect both you and them from potential losses due to title issues. If you’re paying cash for a property, title insurance is still recommended, as it can provide an added layer of protection.

How Does Title Insurance Work?

When you purchase a title insurance policy, the insurance company will perform a thorough search of public records related to the property’s title. This search is meant to uncover any issues or defects that could potentially affect your ownership of the property.

If any issues are discovered, the title insurance company will work to resolve them before you buy the property. If any issues arise after you’ve purchased the property, your title insurance policy will cover the cost of legal fees and potential losses related to the issue.

It’s important to note that title insurance policies are one-time purchases, meaning you pay a one-time premium at closing and are covered for as long as you own the property. This is in contrast to other types of insurance policies, which typically require ongoing payments.


Q: Is title insurance mandatory?

A: While title insurance isn’t legally required in most states, many lenders will require it as a condition of your mortgage loan. Additionally, purchasing title insurance is generally considered to be a smart decision, as it can provide valuable protection against unforeseen issues with a property’s title.

Q: Who pays for title insurance?

A: Generally, the buyer is responsible for paying for title insurance. However, in some cases, the seller may agree to pay for it as part of the sales agreement.

Q: How much does title insurance cost?

A: The cost of a title insurance policy varies depending on a variety of factors, including the location of the property, the purchase price of the property, and the size of the policy. Generally, you can expect to pay between 0.5% and 1% of the purchase price of the property for title insurance.

Q: How long does title insurance last?

A: Title insurance policies are typically in effect for as long as you own the property. However, some policies may have specific time limits or exclusions for certain types of issues.

Q: What should I do if I discover an issue with my property’s title?

A: If you discover an issue with your property’s title, you should contact your title insurance company as soon as possible. They will work with you to resolve the issue and provide any necessary legal assistance.


When buying a new home or property, it’s important to understand the potential risks associated with the property’s title. Title insurance policies can provide valuable protection against unforeseen issues, and are generally considered to be a smart investment for home buyers and mortgage lenders alike.