What is Title Insurance?

A title insurance is an insurance policy that primarily protects the lender or the owner against any property defects, loss, and damages. Property defects include proprietary claims of previous owners, who may or may no longer be legal owners of the property.

On the other hand, losses and damages are primarily caused by liens and encumbrances. A title insurance is subject to different specific terms, conditions, inclusions, and exclusions.

But, the usual title insurance is used only to protect the lender, even if it is paid by the borrower. The owner, on the other hand can also benefit from a title insurance only if it is taken out as a separate policy and is paid by the seller.

How Is Title Insurance Different from Other Types of Insurance?

While common insurance policies such as car insurances, life, or health insurances protect the policyholder against unlikely events in the future, title insurances are established to protect the policyholder against anyone from the past who is claiming ownership of the property. In other words, a title insurance is used to protect the insured person against claims.

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Why is Title Insurance Important?

Even if some states don’t require a title insurance, lenders need it as a crucial part of closing a property. Nonetheless, it is important for any buyer as well because of the following reasons:

  • It protects you and the lender against the possibility of fraudulent or improper turnover of title done by the seller.
  • It protects you from higher expenses if ever a problem on the title arises.
  • The insurance provider can cover court expenses when a lawyer’s representation is needed.


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