Title Insurance: Coverage both for buyers and lenders

Title insurance protect in case there is any loss related to the title of your property. The property that you own now may have been owned by many others in the past. Of the many ownerships there might have been some kind of a weak link in the past that may cause a problem anytime. There could be a forged signature, unpaid taxes and similar such things. If you happen to face any problem related to these, your title insurance will provide protection.

Anyone buying a property may need title insurance. If you buy a property you will definitely want that all the property papers are in place. You need the sellers of the property to have full and legal title. You could make a proper search at the local property records office for a legal title. However, to err is human and the records in the property office may turn out to be incorrect. This is when your title insurance will come in use.

If your house is mortgaged, your lender might require you to have title insurance. This comes as lender's coverage and is designed to protect your lender due to any problem related to the title of your house. Lender's coverage usually provides protection up to the original mortgage amount. If any claim is made on the title of your property, your title insurance will cover and fight on your behalf. In many cases, if there is a claim, it will pay off the loan if required.

Title insurance is primarily of two types:

1. Lender's Insurance:
   Protects lenders who have invested in your property. However, a lender's policy does not necessarily represent the total property value. With the decrease in the life of the mortgage loan, the value of coverage also decreases and finally terminates as the life of the loan too gets over.


2. Owner's Insurance:
   Protects landowners and home owners against particular claims as mentioned in the policy. The owner's policy is optional and you may or may not have it. This kind of a policy protects against any title loss as mentioned in the policy. This also insures the value of the property and provides coverage till the time you or any of your heirs maintain ownership of the property.

In addition to all this, you must also pay for any expenses related to defense or challenges on the title of your property and also for the reduction of land value.

As you insure the title of your property, the title insurer conducts a thorough search looking for historical public records of the property. These records mean court records, deeds, name indexes as well as other public documents. This search is conducted in order that verification is made about the seller's right to sell the property and to confirm that there is no defect or hindrance on the title.

If there is any kind of defect in the title, any hindrances, liens or judgment or any other restrictions like e.g. unpaid taxes, land-use restrictions, unpaid mortgages, it should be revealed from a title search. You must remember that a sellers’ policy is not meant to protect the buyer.

Title insurance provides protection for any loss as a result of claims against your property ownership. This insurance provides protection for you and/or your lender. It is meant to cover hidden risks that occurred before you purchased the property and yet that can endanger your ownership rights. Title insurance covers:

• Coverage for any financial loss due to the claim made on your title.
• Reimbursement for legal costs that is required to defend against a covered claim.
• Cost for paying successful claims against your title up to face value of your policy.

There may also be certain exclusions to your title insurance policy. These usually include:

• A title defect that you had no clue about and that was not either recorded.
• Condemned land
Violations of building and zoning ordinance.
• A fine charged because your deed failed to provide rights of use to adjacent land, streets or waterways.
• Cost of conveyance for title irregularities due to the death of the property owner.
• Any discrepancies or conflicts arising out of shortage in area, boundary lines, encroachment or any overlapping movement.
• If property is on or near a water body and there is right usage of claim.
• Any claim/(s) processes from the parties in possession related to renter or adverse possession against all or a portion of your property.

Title insurance can be obtained from any licensed title insurance company and also the agents who operate within the state. You may shop around a little for the best title insurance quotes. Different insurance providers may have different policies and shopping can help you come across the policy that you find covers you best. The choice is finally yours.

Shopping tips for title insurance:

1. If you own the property you must insure for the full purchase value of your property. Lenders must insure only till the amount of loan.


2. Sellers as well as buyers can negotiate the premiums. Take advice from your title insurer about who pays the various premiums in your area.


3. Match the policy’s effective date with the actual losing date of the escrow.


4. Make sure to ask your title officer about any discounts for first time buyers.


5. If you can get in touch with an insurance provider that offers both owners and lenders insurance, you may be entitled to certain discounts or may be reduced rates.


6. Look for short term financing rates or refinancing discounts.


7. Choose any insurance company that you want. But make sure to check the financial strength of the company so that when you make your claim, you can get the benefit.


8. While going through the policy, make sure you have everything covered. See to it that the policy describes all the clauses in details.


9. See how the title insurers handle claims and if they hold money in a trust until the purchase is complete.


10. Consult a good agent. Take advice from him. But the choice is finally yours to make about which insurance company you want to go with.

Contact your insurance agent or the title insurance company immediately after you sense any problem that you think might endanger your ownership rights. Always make your claims in writing and keep copies of relevant documents that need to be submitted with your claim. Keep these copies one for your record and one for the insurance company. After you have made your title insurance claim, an adjuster or investigator will shortly get in touch with you and you should receive a response from them very soon.

If you are planning to buy a property, it is advisable that you also purchase title insurance. Get your agent to investigate the title properly and see if there are any loop holes. Hassles involved with property are something you do not want to take burden of. So be as careful as possible when buying a property.