Importance Of Title Insurance

What Are Title Insurance Policies – Do You Need Title Insurance?

Assuming that you are financing your dream home, you do need title insurance. In fact your lender will insist on it. Because humans are involved in recording deed transfers and plotting land parcels, a lot can go wrong. You want title insurance because it will protect you against defects and human error. Depending upon the title company, you, the consumer, can choose among a variety of options, but the most common three choices are Owners, Lenders, and Extended Coverage.

Owners Policy

The owner’s policy insures a buyer that the title to the property is vested in that buyer and that it is free from all defects, liens and encumbrances, except those which are listed as exceptions or are excluded from the policy’s coverage. It also covers losses and damages suffered if the title is unmarketable and loss, if there is no right of access to the land. Although these are basic coverage’s, expanded forms of residential owner’s policies exist that cover additional items of loss.

The liability limit of the owner’s policy is typically the purchase price paid for the property. As with other types of insurance, coverage’s can also be added or deleted with an endorsement. There are many forms of standard endorsements to cover a variety of common issues.

Lender’s Policy

The lender’s policy, also known as a loan policy, is issued to only mortgage lenders. Generally, it follows the assignment of the mortgage loan; meaning that the policy benefits the purchaser of the loan if the loan is sold.

Who Pays For Title Policy?

Usually there is a custom in a particular state or county on the matter which is reflected in a real estate contract. The premium for the policy may be paid by the seller or buyer, as the parties agree. In Florida, it is negotiable in the purchase offer. Sometimes the sellers and buyers split the fee for the owner’s policy, but typically, the buyer pays for the lender’s coverage. Consumers should inquire about the cost of title insurance before signing a real estate contract which provides that they pay for the title charges.

How Long Are Title Policies Good For – How Often Are Title Policy Insurance Premiums Paid?

Forever, theoretically. Title insurance coverage lasts as long as the insured retains an interest in the land insured and typically no additional premium is paid after the policy is issued. Title policy insurance is the best insurance policy you can ever buy.