What is Title Insurance?
By Jack S. Waverly,
Title insurance is one of many types of insurance which homeowners need to carry to protect themselves against claims or damage to the property. As with many forms of insurance required for lending, title insurance serves as double protection for both the lender and the person taking the loan. Title insurance has a very different use in regards to how it protects the owner of property.
Identification
1. Title insurance is a type of insurance policy bought to protect you against loss from problems connected to your title to property.
Function
2. This insurance protects the insured for any claims or legal fees which arise from criminal or other negligence from previous title holders to the property. It is basic protection against problems in the chain of ownership of a given property.
Types
3. There are two types of title insurance: the owner’s policy and the lender’s policy. As the names imply, the owner’s policy protects the owners of the property, while the lender’s policy protects the bank or mortgage holder.
Significance
4. This insurance is required by mortgage lenders for any real estate loans. Title insurance is used for protection against past events or occurrences only.
Effects
5. Title Insurance can cover situations such as missing heirs, fraud, liens, or tax problems stemming from previous ownership. It means that you are not liable for previous owner’s mistakes.
