When purchasing real estate, protecting your investment is essential. Title insurance and owner’s title policies are two options that provide different types of protection. Understanding their differences can help you choose the right coverage for your needs.
What Is Title Insurance?
Title insurance is a policy that protects lenders and buyers against potential issues with the property's title. It covers problems that may arise from past ownership claims, liens, or legal defects that were not discovered during the title search.
Owner’s Title Policy
An owner’s title policy is a type of title insurance purchased by the buyer. It provides protection for the homeowner against future claims or disputes over property ownership that could surface after the purchase.
Key Differences
- Coverage: Title insurance typically covers issues that could affect the lender's interest, while owner’s policies protect the homeowner’s ownership rights.
- Cost: Owner’s policies are usually paid once at closing and can be more comprehensive.
- Duration: Both policies last as long as the owner or lender has an interest in the property.
Which Is Right for You?
If you want to ensure your ownership rights are protected, an owner’s title policy is advisable. It offers peace of mind against future claims that could threaten your property rights. Lenders typically require a title insurance policy to secure their investment during the mortgage term.