The main reason for title insurance to exist is to protect the parties who are involved in real estate transactions.
The title insurance companies provide protection to real estate investors.
From a just home purchase to a multi-million dollar business transaction, real estate investors can receive title protection and coverage that will secure their transactions.
What is Owner’s Title Insurance?
There are two main types of title insurance: the owner’s title insurance policy (which protects the buyer) and the lender’s policy ( which protects the lender).
If you are a homebuyer, owner’s policy will cover your losses in case it is found that the property belongs to someone else, or if there is a defect in the title, or if there is no access to the land and other undesirable events.
On this page you will see:
What is Owner’s Title Insurance? Definition and Explanation.
An owner’s policy is purchased by the homebuyer. Owner’s title insurance policy protect the buyer’s financial investment in the home.
In simple words, the owner’s policy assures you as a purchaser that the property is free from defects and encumbrances. It also covers losses and damages suffered if the title is unmarketable.
An owner’s policy can protect you from: unpaid mortgages, unpaid property taxes, missing heirs who could claim the property belongs to him or her and etc.
Your Owner’s Policy will pay valid claims and all costs that occur in defending against attacks on the title.
It is your choice to purchase an owner’s title insurance policy or not.
However, it is an important way to protect your property rights, as well as your inheritors, and beneficiaries.
An Owner’s Policy is mainly issued in the amount of the real estate purchase price.
Any owner’s policy has a section that explains what is covered. As with many other insurance types, coverages can be added or deleted with an endorsement.
The Owner’s insurance guarantees you that your property is free from defects (except these listed as exceptions in the policy). In addition to that, it guarantees you have access to the land, and you have the right to sell the property.
Do I Need Owner’s Title Insurance?
As we mentioned above, owner’s title insurance protects you from the possibility that someone may come and contest your ownership of a property.
Maybe you would say that this possibility is rare in the real life. Yes, it is not common at least not so common as many other insurance risks.
However, it could happen.
Unfortunately, it happens innocent homeowners, to end up being scammed. And in our ages, scams and frauds are growing.
It is a personal choice to purchase or not an owner’s title insurance. Here we will list some of the benefits of purchasing it.
If someone asks you: “What is the most important type of real estate insurance?” Probably your answer without hesitation would be “homeowners insurance”.
And yes, you are right. At last, homeowners insurance protects you against potentially significant financial losses in case of damage from fire, water, wind, vandalism, and etc.
However, who can ensure you the property actually belongs to you?
That’s where owner’s title insurance is coming.
Whether you’re buying an older home or a new construction house, it is worth to consider purchasing owners title insurance policy.
Here is one more important point – before the real estate deal and transaction are completed, a title search of the records is made in order to locate potential problems and situations so that they can be rectified and the transfer can proceed.
It means that during the title search, title companies find and fix problems with the title. So, title insurance emphasizes risk prevention not only risk assumption.
In other words, it provides the best possible opportunity for avoiding losses or claims in real estate transactions.
So, before decide should you buy owners title insurance or not, take you time to research the all possible pros and cons.
Who Pays Owner’s Title Insurance?
It is optional.
The premium for the owner’s title policy may be paid by the buyer or by the seller as the parties agree.
In many USA states, the seller pays for the owner’s title insurance policy as a seller closing cost. However, in other US states, the buyer pays for the owner’s title insurance policy as a buyer closing cost.
The costs of the owner’s title insurance policies will vary depending on the location. The costs vary from state to state, and even from one company to another.
Title insurance policies generally require one-time payment on or before the transaction’s closing date.
What is the Difference Between Lender’s policy and Owner’s policy?
To find out the difference, let’s first define “What is Lender’s Title Insurance?”
If you about to get a mortgage on the property, your lender will require a loan policy to protect their interest in the property.
Lender (also known as “loan”) policy is a type of title insurance that protects the mortgage lender’s interest in the property. It is issued only to mortgage lenders.
A loan or lender’s policy protects the lender until your mortgage is paid off.
This type of policy also is known as the ALTA policy and is a standard policy approved by the American Land Title Association.
Lender’s title insurance protects the lender against problems with the title and it is required by most lending institutions to ensure their security interest.
Loan Policy is issued in the amount of the loan, and liability decreases as the mortgage debt is reduced.
The main difference between owner’s and lender’s policies is that the first protects the buyer, and the second protects the lender.
The two types of title insurance (owner’s and lender’s) are necessary to ensure the same piece of property. Generally, you will pay for the two policies together with a discount. When the two types of policies are issued at the same time, the premium is less expensive than if they are issued separately.
Title Insurance Companies
Title insurance differs a lot from other types of insurance. The title industry has a strong dependence on real estate market.
As you may know, the real estate market is very sensitive to mortgage interest rates and to the overall economic well-being.
Even title insurance premiums are not commonly calculated with the help of actuarial science, as is true in most other types insurance such as: health insurance, life insurance and etc.
So, title insurance is a specialized product that the majority of the insurance companies do not offer. In fact, just a small number of insurers provide the vast majority of U.S. title insurance policies.
Here is a list of the largest title insurance companies that hold the main part of the total title insurance market.
Fidelity National Financial, Inc., is organized into two groups, FNF Core (NYSE:FNF) and FNFV.
FNF Core is a leading provider of title insurance, technology, and transaction services to the real estate and mortgage industries.
FNF is the nation’s largest title insurance company through its title insurance underwriters – Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York – that collectively issue more title insurance policies than any other title company in the United States.
First American Title Insurance Company provides comprehensive title insurance protection and professional settlement services for homebuyers and sellers, real estate agents and brokers, mortgage lenders, commercial property professionals, homebuilders and developers, title agencies and legal professionals to facilitate real estate purchases, construction, refinances or equity loans.
As one of the largest title insurance companies in the nation, First American offers title insurance and settlement services through its direct operations and an extensive network of agents throughout the United States and internationally.
Old Republic National Title Insurance Company is also one of the top title insurers that provide title insurance policies, real estate transaction, mortgage lending products and etc in the United States.
They offer products and services through a national network of affiliates, own offices, agents, and approved attorneys.
Stewart Title Guaranty Co. and Stewart Title Company are wholly owned subsidiaries of Stewart Information Services Corp. (NYSE-STC), a customer-driven, technology-enabled, strategically competitive, real estate information, title insurance and transaction management company.
Stewart Title is one of the largest title companies in the industry. Comprised of a family of companies, Stewart provides title insurance and related information services required for settlement by the real estate and mortgage industries throughout the United States and international markets through a network of owned operations and Stewart Trusted Provider title agencies.
Stewart delivers global title insurance policies and escrow services in more than 80 countries – spanning Asia, the Americas, Europe and Africa – through their network of regional offices in Australia, Canada, Europe, Australia and the U.S.
Some other title insurance companies:
Download the following Title Insurance Infographic in PDF