Title Insurance: A Crash Course

We encounter insurance on a day-to-day basis substantially in the form of life insurance policies, car insurance, and homeowners insurance. Just like these more colloquial forms of insurance, title insurance endeavors to afford its holder protection against loss in the event that the condition of title to the land is other than as insured.

Admittedly, there are some nuisances and intricacies of Title Insurance. Thus, it should come as no surprise that the average homebuyer may be unwilling to explore policy terms in detail. Don't despair! Duggan & Pawlowski works with title insurance on a regular basis, making our experienced law firm the ideal choice for the homebuyer considering Title Insurance for their home.

What follows are the most frequently asked questions by our clients and our answers to those questions. Of course, you should always consult with an attorney before purchasing title insurance polices. This information does not substitute for legal advice. Rather, the following information hopes to shed light on an otherwise murky area of residential real estate purchase and sale transactions-Let's get started!

What is Title Insurance?

At its core, title insurance is just another form of insurance. Most if not all types of insurance policies afford the holder of the policy some level of protection against loss. Title insurance is no exception. Like other forms of insurance, title insurance operates to protect the holder of the policy from loss if the condition of title is other than as insured.

What Does Title Insurance Cover?

Title Insurance covers a variety of claims and risks associated with owning title to real property. Companies offering title insurance graduate the breadth of coverage based on the "level" of the particular policy in question. Title insurers offer standard, extended, and comprehensive coverage plans. If you were to purchase the standard level policy from an insurer, you may be covered for forgery, impersonation, or the presence of an undisclosed prior lien or mortgage.

Title insurance on undisclosed prior liens or mortgages is particularly important when purchasing a new-build home, a fact many home buyers find surprising. Take an example of a couple that purchased a home in a new development. The project management company overseeing the development declared bankruptcy soon after completing the homes. As recourse, the subcontractors who supplied the electrical work on the homes had a lien on all parcels of land. This couple found themselves with a lien on a brand new house, just weeks after moving in. Thankfully, they erred on the side of caution and purchased title insurance before closing.