Title Insurance Explained
Title insurance protects you if a problem with your ownership of the home shows up after you buy. You pay for it once, at closing, and it protects you for as long as you own the home.
What Is a "Title"?
Your title is your legal right to own and use your home.
Public records show who owned the home before you and whether anyone has a claim on it, like an unpaid loan. Before you close, we search those records and fix the problems we find.
But some problems are hidden. Title insurance is there for the problems a search cannot catch.
What Can Go Wrong
Common risks covered by your homeowner's policy.
The seller did not have the right to sell
Fraud, forgery, a fake seller, or a seller without legal authority can all cloud your ownership.
Someone else claims your home
A missing heir, a forged deed, or a break in the chain of past owners can lead to a claim against your title.
An old debt comes with the house
Unpaid property taxes, a past owner's mortgage, a court judgment, or unpaid HOA dues can become a lien on your home.
Your access is blocked
Your legal right to get to and from your property can be challenged.
Legal fights are expensive. If someone challenges your ownership over a covered problem, your policy pays the cost of defending you.
Your Lender's Policy Does Not Protect You
There are two kinds of title insurance. Only one of them is for you.
Lender's Policy
If you get a mortgage, your lender requires this policy. It protects only the lender's loan. You are not covered by it, and you cannot make a claim under it.
Owner's Policy
This policy protects your ownership and the money you put into your home. It is optional, and it is the only way to get title protection for yourself. You pay once, and it lasts as long as you own the home. It also carries over to your heirs.
Basic vs. Enhanced: What Is the Difference?
When you buy a home, you choose between two owner's policies. Both protect your ownership. The Enhanced Homeowner's Policy was built specifically for residential homeowners. It adds protection for many everyday problems with the house and land.
| What the policy protects against | BasicOwner's Policy | EnhancedHomeowner's Policy |
|---|---|---|
| Core ownership protection | ||
| Someone else owns an interest in your title | ✓ | ✓ |
| A document was not signed properly | ✓ | ✓ |
| Forgery, fraud, or pressure in a past sale | ✓ | ✓ |
| A document was recorded wrong in the public records | ✓ | ✓ |
| Old liens: a past mortgage, a judgment, taxes or special assessments, or HOA charges | ✓ | ✓ |
| Your title cannot be sold because it is "unmarketable" | ✓ | ✓ |
| Illegal discriminatory covenants | ✓ | ✓ |
| Coverage carries over if you move the home into a living trust | ✓ | ✓ |
| Problems with the house and land | ||
| Mechanic's lien (an unpaid contractor or supplier puts a claim on the home) | No | ✓ |
| You are forced to remove a structure because it sits on a neighbor's land or an easement, breaks a recorded restriction, or breaks a zoning law | No | ✓ |
| You cannot use the home as a single-family home because of a recorded restriction or zoning | No | ✓ |
| Building permit violations (for example, a past owner built without a permit) | No | ✓ |
| Violations of building setback rules | No | ✓ |
| Restrictive covenant violations | No | ✓ |
| A covenant violation that causes your title to go back to a past owner | No | ✓ |
| Unrecorded easements | No | ✓ |
| An unrecorded lien by a homeowners' association | No | ✓ |
| No legal vehicle and foot access to your property | No | ✓ |
| The recorded map does not match your legal property description | No | ✓ |
| Subdivision law violations | No | ✓ |
| A boundary wall or fence crosses onto a neighbor's land | No | ✓ |
| Problems that start after you buy | ||
| Forgery after you buy (someone forges your name to sell or borrow against your home) | No | ✓ |
| A neighbor builds onto your land after you buy | No | ✓ |
| Someone claims part of your land by using it openly over time (adverse possession) | No | ✓ |
| Someone claims a right to cross or use your land because of long use (prescriptive easement) | No | ✓ |
| Damage to your home from mining or water extraction | No | ✓ |
| Extra benefits | ||
| Helps pay rent for a substitute place if a covered problem forces you out | No | ✓ |
| Protects your rights under unrecorded leases | No | ✓ |
| Your coverage amount grows automatically, up to 150% over five years, to keep up with rising home values | No | ✓ |
Every policy has exceptions, exclusions, and conditions.
Which One Is Right for You?
The Enhanced policy is usually the better fit if:
- You are buying a home or condo to live in.
- The home has had additions, a finished basement, a deck, or other work done over the years. Building permit and zoning problems are covered.
- There are fences, walls, sheds, or driveways near the property line.
- You plan to stay a long time. Your coverage can grow with your home's value, and you are protected against forgery and encroachment that happen after you buy.
The Basic policy may make sense if:
- The property is not a one-to-four family home, such as vacant land or a commercial building. The Enhanced policy is not available for those.
- You have reviewed the gaps in the chart above and the lower price matters more to you.
Dave Ramsey on Title Insurance
Personal finance host Dave Ramsey answers the question: is title insurance worth it when buying a house?
From The Ramsey Show, about 4 minutes. Watch on YouTube. National Settlement Services is not affiliated with Ramsey Solutions.
Common Questions
How much does title insurance cost?
The price depends on the price of your home and which owner's policy you choose. You pay it one time, at closing. There is no monthly or yearly bill. Our quote tool shows the Basic and Enhanced prices side by side.
How long does an owner's policy last?
For as long as you own the home. The coverage also continues for your heirs. It can even protect you after you sell, if you are ever held liable under the title promise you gave the buyer.
Is owner's title insurance required?
No. If you get a mortgage, your lender will require a lender's policy, but that policy only protects the lender. You cannot make a claim under it. The owner's policy is optional, and it is the only one that protects you.
If the title search is clean, why do I need a policy?
We search the public records and clear the problems we find before closing. Some problems do not show up in the records at all, such as a forged signature, an unknown heir, or a filing mistake. The policy covers you if one of those surfaces later.
Is a title commitment the same as a title policy?
No. A title commitment is an offer to issue a policy. It describes the coverage you will get, but it does not protect you. Your protection starts with the policy itself.