In short, title insurance protects you from the unknown. More than likely, your home is your biggest investment, and title insurance protects your interest in that investment. Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. While other types of insurance (such as flood, auto or homeowners) provide coverage that focuses on possible future events, title insurance protects against loss from hazards and defects already existing in the title to a property. An example of such a defect is improperly executed documents from a previous sale or a lien against a previous owner.
Another difference between other types of insurance and title insurance is in how the policies are paid for. Title insurance is purchased with a one-time premium and provides coverage for as long as the policyholder or their heirs own the property. This is unlike the annual or monthly premiums you must pay for other forms of insurance.
Title insurance provides valuable protections at a good value. Examine the cost of title insurance over the life of the policy versus other types of insurance and you’ll find that policyholders receive great value for the money they spend.
Over half of all real estate transactions have a problem somewhere in the chain of title. Insurers find these issues and assist in taking corrective action to enable the transactions to go through. So the next time you refinance or purchase a new home, remember that title insurance gives you peace of mind at a great value.