When you purchase or refinance a parcel of property, title insurance protects insured parties, whether it is the lender or the real estate owner, against any loss or damage they might experience because of prior liens, encumbrances or defects with regards to the title of that property. As an agent of Stewart Title Guaranty Company, a trusted provider of title insurance coverage nationally for over 120 years, Rounsavall Title Group primarily writes two types of title insurance policies: lender’s title insurance, which protects solely the lender, and owner’s title insurance, which protects the individual purchaser of the property.
Title insurance differs from other types of insurance, such as auto, life, or health, in two primary ways: (a) those types of policies protect you against potential future events, and (b) those policies are paid for with regularly scheduled premiums that must be continually paid or the coverage they provide you could lapse. A title insurance policy, however, insures against events that have already occurred as they relate to the real property and every single person or entity who has ever owned it, all for a one-time premium paid for at the closing. These “events” might include other people who might claim an ownership interest to the property, improperly recorded documents, fraud, forgery, liens, encroachments or easements.
A few factors can affect the cost of the premium of a title insurance policy. These factors can include the purchase price being paid for the property, its location, as well as the amount as the amount of money you are borrowing (if any) to purchase the property. Also, should you elect to refinance your property, you might be eligible for a “reissue” rate on your next lender’s title insurance policy, which would entitle you to a substantial discount on the premium you would have to pay for that next policy.
In today’s marketplace, every mortgage lender requires that a borrower purchase a lender’s title insurance policy at closing when they are borrowing money to purchase or refinance a home. That is how important banks and mortgage lenders have determined that the protection this type of insurance provides them. However, it is important to note again that this lender's policy only protects the lender, and does not afford any protection whatsoever to the home owner. So in the event of a title defect, an uninsured home owner would be completely unprotected. This could ultimately lead to that home owner losing any or all of the equity they have established in their home. But a home owner with a valid owner’s title insurance policy would have financial protection against these covered defects, just like the lender would be, and the insurance company will pay for the home owner’s defense against the claim, and satisfy any valid claims.
As such, we strongly recommend that every home owner obtain an owner's title insurance policy in order to be fully protected in the event of a claim. Should you have any questions regarding owner’s title insurance or the coverage it can provide you and your family, please feel free to contact us for more information.