Mortgage Title Insurance Policies
For the most part, title insurance is almost always required by the lender. This insurance is used to protect the lender against loss resulting from legal claims by others against your new home. In some states, lawyers will offer title insurance as a portion of their services in examining the home’s title and providing a title opinion as to whether it is clear or not. The attorney’s fee may include the title insurance premium or in some cases it may not. In other states, a title insurance company or title agent directly provides the title insurance.
It is important for consumers to understand that the lender’s title insurance policy does not protect the consumer. The same is true with the prior owner’s policy; it does not protect you. When you need to protect yourself against claims by others against your new home, you will need what it is called an owner’s policy. The truth is should a claim occur, it can be financially devastating to the homeowner who is uninsured.
It is good to keep in mind that if you buy an owner’s policy, it is much less expensive if you buy it at the same time and with the same insurer as the lender’s policy.