Acquiring title insurance usually happens prior to the closing of your new home. You will be expected to understand what type of coverage you need and whether the policy you are purchasing will also work to cover you as the owner. In order to make sure that you are choosing the best policy for your needs, it is important to understand what qualities make a home owner’s title insurance policy right for you, and where confusion may arise during the selection process. Here’s what you need to know when preparing to buy a title insurance policy for your new home purchase.
What Title Insurance Does for You
Title insurance is a part of home ownership that should not be neglected. It can be tempting to opt out of buying an owner’s policy when reviewing all of the other costs that are a part of closing on a property, including the purchase of a lender’s title insurance policy, but one of the main benefits of title insurance is that the payment is different from most other types of insurance. Instead of paying a monthly premium in order to secure coverage, you will pay a one-time fee which is usually a percentage of the home’s total purchase price. From this single payment, you are covered for the entire time that you own the home.
Owner’s title insurance protects homeowners from a wide range of potentially problematic title issues, including fraud or forgery. In some instances, the person from whom you purchased the home did not legally own it which means that you are not the true, current owner either. Title insurance can safeguard your investment in these situations.
Similarly, if you buy a home that you later discover has undisclosed liens, you as the new owner would be responsible for paying these debts even if you did not know about them at the time of purchase. Title insurance protects homeowners from title related issues that can cause financial damage, or the loss of your property.
What to Look for in Owner’s Title Insurance
Not all title insurance is the same. In order to select the policy that is right for you, be sure to consider:
The type of coverage: If you have already purchased a lender’s title insurance policy as part of closing, it is important to understand who this covers. The lender’s policy only covers the entity that is servicing your mortgage; it does not cover you or your investment in the property. For this type of protection, you will need to secure your own owner’s policy.
Coverage inclusions: Review any title insurance policy you are considering, to determine what types of title issues are covered. Most title insurance will protect homeowners against the biggest and most common threats, such as formerly unknown liens, unexpected claims from heirs, inheritance issues, forgery and fraud, improper documentation and filing issues. If you have a particular area of concern, ask your insurance agency to confirm that it is included in your coverage.
Coverage exclusions: Knowing what is not included in a title insurance policy is just as important as what is. You may be surprised to know that not all policies will include coverage for situations including easement use, zoning disputes and property line or border issues. You may face troubles here if, for example, you try to build a fence, shed or other similar structure, and a neighbor claims that you are encroaching on their property. If these areas are important to you, you can often secure riders for your title insurance policy that add these coverages.
Claim cap: Some policies will include a limit to how much you can claim, such as a lifetime maximum. Make sure that this amount can cover, at a minimum, the full purchase price of the property. Otherwise, you could be faced with a title problem that results in you losing money on your investment.
Responsiveness: The policy itself is not the only thing to review carefully; consider also, the agency from which you are securing the policy. You should work with a company that responds quickly and has experience in the area; otherwise, you could be stuck allowing title problems to continue to develop while waiting for a return call from your agent. The insurers from your area will be aware of the most common problems in the region related to title insurance. They will also be responsive and have a history of success when it comes to claims.
Trust the Pros to Help You Pick the Right Coverage for Your Circumstances
Whether you are making your first home purchase, or you are a seasoned buyer, title insurance is always important. Be sure to spend the time carefully reviewing your potential coverage before you agree to a policy. The experts at Mathis Title Company can help you choose the right type of title insurance coverage for your situation. Contact our team to learn more or to schedule an appointment to get started.