Title Insurance

Unlike most insurance (which covers future risks), title insurance covers past events — defects in the chain of title that existed before the policy was issued but were unknown at the time. Common covered claims include: forged deeds in the chain of title, undisclosed heirs, clerical errors in public records, and fraud in prior transactions. Title insurance is a one-time premium paid at closing; the policy remains in effect as long as the insured (and their heirs) hold the property.

Two types of title insurance policies are typically issued: an Owner's Policy (protecting the buyer) and a Lender's Policy (protecting the lender — required by virtually all mortgage lenders). The Lender's Policy covers only the loan amount and decreases as the loan is paid down; the Owner's Policy covers the purchase price and does not decrease. Critically, title insurance does not cover defects disclosed in the title commitment's Schedule B-II — only those that were unknown to the title company at the time of the search. Buyers should understand that title insurance is a backstop, not a substitute for reviewing the title commitment carefully.