Title insurance is different from other types of insurance in that it protects you, the insured, from a loss that may occur from matters or faults from the past. Other types of insurance such as auto, life or health cover you against losses that may occur in the future. Title insurance does not protect against any future faults. Another difference is that you pay a one-time premium. A title insurance policy will protect you from "risks" or undiscovered interests. There are two principal forms of title insurance: The lender's policy The homeowner's policy What is a Lender's Policy? A lenderís policy protects the mortgage holder. If there is a fault in title that results in a loss, the mortgage holder will be paid back. What is a Homeowner's Policy? A homeownerís policy protects you, the purchaser, against a loss that may occur from a fault in your ownership or interest you have in the property. You should protect the equity in your new home with a title policy. What does a Homeowner's Policy provide? Protection from financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy. Payment of legal costs if the title insurer has to defend your title against a covered claim. Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy. There are many title insurance companies to choose from. Your attorney, escrow company, or real estate agent should be able to help you make a decision.
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