What is Title Insurance?
Title insurance is a contract of indemnity between the insured and the insuring company relating to the title to the land described in the Policy. It protects the insured against loss or damage by reason of defects, liens or encumbrances of the insured title existing at the date of the Policy and not expressly excepted from it's coverage.
The Policy is issued after a complete search and examination of the public records and shows the condition of the record title, including any money obligations outstanding against the property, easements and other matters which may affect the rights of ownership, possession and use of the property.
The policy insures that the "record" title is good subject only to those items expressly set out in the Policy. It also insures against certain matters, which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interests of missing heirs, and status of individuals not having the "right' to sell the property.
There are different types of title insurance policies. "Fee" (owner's coverage) policies are issued to purchasers who are about to acquire an interest in real estate. Mortgage policies (lender's coverage) are issued to mortgage lenders. An owner's policy protects only the owner while a mortgage policy protects only the holder of the mortgage on the property.
Title insurance is unlike "risk" insurance, such as car insurance or fire insurance, where you pay premiums in monthly, quarterly or annual payments to protect yourself against an event that may occur in the future. The original title insurance premium which is paid at closing, is the only cost for as long as you own your property.