What is Title Insurance and Why Do I Need It?
A home is generally the largest single investment any of us will ever make. When you purchase a home, you may purchase several types of insurance coverage to protect your home and personal property. For instance, Homeowner’s insurance protects against loss from fire, theft, or wind damage. Flood insurance protects against rising water. And a unique coverage known as Title Insurance will protect you against hidden title hazards that may threaten your financial investment in your home.
When you purchase a home, you don’t purchase the actual building or land. Instead, you purchase title to the property – the right to occupy and use the space. That title may be limited by rights and claims asserted by others, which may limit your use and enjoyment of the property and even bring financial loss. Title insurance protects against these types of title hazards. Other types of insurance that will protect your home focus on possible future events and covers structures and liabilities whereas title insurance protects against loss from hazards and defects that already exist in the title.
In spite of all the expertise and dedication that go into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises. Some examples of hazards include:
- A forged signature on any previous deed, which would mean no transfer of ownership to you;
- An unknown heir of a previous owner who is claiming ownership of the property;
- Instruments executed under an expired or a fabricated power of attorney;
- Mistakes in the public records;
- Fraudulent Transactions; or
- Errors in paying of previous deeds of trust affecting title to the property.
Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims. All for a one-time charge at closing.
Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner’s title insurance policy.