Title Insurance provides you the protection from any current or future title defects. If you possess an Owner's Title Insurance Policy, the title insurance company will defend your interest in the property against claims brought by another party. The title insurance company will also protect you against any financial loss because of any title defect.
Even the most detailed title searches will not detect many possible title defects. Here are just a few of the most common hidden risks that can cause a loss of title or create an encumbrance on title:
There are three different types of title insurance, Lenders Title Policy ("Lender's Policy"), Standard Owner's Title Policy ("Owner's Policy"), and the Homeowner's Title Policy ("Enhanced Policy").
A Lender's Policy is required by all lenders as a condition for the loan. This policy only covers the lender, in the amount of the loan. The Lender's Policy is the standard ALTA Loan Policy. This policy protects only the lender, and only for the life of the loan, against certain possible defects which could jeopardize the Lender's security in the property.
The Owner's Policy is the Standard ALTA Owner's Policy, protecting you from certain limited defects which may not be revealed in a title search. The Homeowner's Policy is typically selected by the Purchaser and covers most title defects, and includes affirmative mechanics lien coverage.
An ALTA Standard Owner's Policy or ALTA Homeowner's Policy is issued at settlement for a one-time premium paid at the time of settlement. Your policy protects you against prior title defects, or any claims against your title, even those possibly raised after you sell property or pay off the loan. This is important because liability for title defects can service even beyond your ownership in the property. Although the Owner's Policy requires only a one-time payment, the Lender's Policy is only applicable to the current transaction. Therefore, you must pay for a new Lender's Policy each time you get a loan. Please ask us about a reissue rate for title insurance.