When making a purchase of a property or building, you already go through numerous steps to protect yourself. Think of things like getting a home inspection and checking on the buyer’s history as only a few examples of the extra effort put into ensuring that you are making a wise choice. Title insurance is another option that offers protection should something go wrong with your purchase. The advantage is that this insurance protects you even after you have closed on the property. However, not all title insurance policies are the same; to ensure that you are making the right choice for your situation, it is important that you understand the difference between standard title insurance and an enhanced title policy.
What Does a Title Insurance Policy Do?
A standard title insurance policy is the baseline plan that you can select with all companies that offer title insurance. This type of insurance is often purchased before a home closing, and it protects the buyer from certain incidents related to the title of the property. For example, if the public record regarding the home contains errors that would interfere with your ownership claim to the property, title insurance would protect you. However, there are a wide variety of errors and unknown circumstances that could threaten your right to own the home—even after you spend your money to purchase it or take out a mortgage—and not all of them are covered under a basic title insurance policy. For this reason, some home buyers elect to upgrade to enhanced title insurance so that they are protected from even more potential pitfalls.
How Is Enhanced Title Insurance Different?
Enhanced title insurance, as its name suggests, offers more comprehensive protection than a standard title insurance policy. If you purchase the base protection title insurance, you can expect to be protected from general issues such as mistakes in the public record, defects in the recording of documents, fraud, forgery and previously unknown heirs making a claim on the property to take it from you. However, this is not all that could potentially happen when it comes to your property title.
Enhanced title insurance covers all of these features, but it adds additional protections as well. If liens were previously undisclosed and then discovered after your purchase, you will not be responsible for paying them. Furthermore, lack of access to the property and zoning issues related to the home are also covered. Additionally, enhanced title insurance protects you against the encroachment of structures onto your new property—which is a more common concern than you may imagine.
Should I Buy An Enhanced Title Policy?
The question of whether you should buy an enhanced title insurance policy comes down to your financial plan and risk tolerance. It is important to note that unlike many other types of insurance, title insurance is purchased in one lump sum rather than through repeating monthly payments. For many people, this makes title insurance an appealing one-time cost for its protection. The reality of the matter is that you could lose your home and any equity that you have put into it if an issue arises regarding the property’s title, and the protection and peace of mind offered by enhanced title insurance is often worth the one-time expense.
Understanding The Pricing Difference
In truth, enhanced title insurance is not that much more costly than its standard, basic counterpart. On average, a basic title insurance policy tends to cost about $4 per $1000 of coverage. If you opt for the enhanced title insurance policy, you are only adding an average of about 80 cents per $1000 of coverage, making it a worthwhile upgrade for many home buyers. However, whether enhanced protection is right for you is an individual question, and it is worth talking to the title insurance professionals about your situation and what factors you should consider for yourself.
Trust The Professionals To Answer Your Title Insurance Questions
If you are in the process of purchasing a home or property and are looking to protect your investment, you have a variety of options. One of these choices is whether or not to buy a title insurance policy—and if so, which type is right for you. The experts at Mathis Title Company would be happy to help you understand all of the benefits that an enhanced title policy offers and whether the additional expense is right for your situation. Reach out to schedule an appointment to discuss your title insurance options or simply to receive answers to any questions that you may have about the title insurance process in general. We are here to help.