You’re almost done purchasing a home, and you’re wondering: Why do I need title insurance? Basically, it’s to protect your investment.
A title insurance policy protects against hidden title hazards that may threaten your financial investment in your home. You get it for the same reason you bought homeowners insurance to protect against loss from theft, fire or wind damage, and flood insurance to protect you from rising waters.
Title Insurance is Unique Among Insurance Products
Other insurance products—automobile, health, fire, life—protect consumers from losses incurred if something happens in the future. Title insurance protects from losses caused by errors that may have occurred in the past.
When you purchase a home or a piece of land, you are buying something that has been owned by people before you — sometimes by many, many people stretching back a century or more. The title to your land could have any one of the hundreds of title defects.
I paid for a Title Search; Why do I need Title Insurance?
A standard part of due diligence in any property transaction is a title search, which is conducted at the county recorder’s office. If a title search has already been conducted on your property, and any outstanding issues have been cleared, why do you need title insurance?
Because mistakes can be made. Things can be missed. You still need some kind of insurance that would protect you from future claims or undiscovered interests should they arise after you purchase your property. Real estate is too big of an investment to leave the validity of your ownership to chance.
A common example of an undiscovered interest? When a previous owner’s family member claims that they had interest in the property before it was sold, which would render the sale —and your interest—invalid.
When you pay the small, one-time premium for an Owner’s Title Policy, your Title Agent and Underwriter will be ready to defend you in court, if necessary, at no cost to you, and will either perfect the title or pay valid claims.
Other examples of hidden title hazards that title insurance is meant to combat include:
Let Us Guide You Through the Purchasing Process
There are no dumb questions, and when you’re a soon-to-be homeowner, the question Why do I need title insurance? is no exception.
Purchasing a property includes so many fees, so many moving parts, and so many questions that it’s easy to get overwhelmed. We hope this blog cleared up any confusion you had.