What Does Title Insurance Actually Protect Against?
Title insurance covers a range of title defects: forged deeds, undisclosed heirs, recording errors, boundary disputes, unpaid contractor liens, back taxes owed by prior owners, and fraud in the chain of title. Without title insurance, a buyer could lose the home or face costly legal battles to defend ownership against claims they had no way of knowing about before purchase.
What Is the Difference Between Lender's and Owner's Title Insurance?
Lender's title insurance is required by virtually all mortgage lenders and protects the lender's interest up to the loan amount. Owner's title insurance is optional but highly recommended — it protects the buyer's full equity in the property. The two policies are usually purchased together at closing. The lender's policy alone leaves the buyer's equity exposed.
How Much Does Title Insurance Cost?
Title insurance is a one-time premium typically ranging from $500 to $2,000, depending on the purchase price and state. Unlike other insurance, there are no ongoing premiums. Some states regulate title insurance rates; in others they're competitive. Shop around in states that allow it — savings can be meaningful even on a one-time purchase.
Frequently asked questions
Do I need title insurance if I'm paying cash for a home?
No lender requires it if there's no loan, but owner's title insurance is still wise. Title defects can surface years after closing. Without insurance, defending your ownership in court could cost far more than the one-time premium.
Does title insurance transfer to a new buyer when I sell?
No. A title insurance policy protects only the named insured for the period they own the property. The new buyer must purchase their own policy at closing, which is standard practice in every real estate transaction.