Owner’s Title Insurance: What is it and do I need it?

Owner’s Title Insurance: What is it and do I need it?

When purchasing a home, there are a myriad of decisions to be made from beginning to end of the entire transaction.  Which real estate agent should you use?  Which lender will you work with?  Which title company should you choose?  Will you purchase owner’s title insurance?  The list goes on and on.   As a top rated title and settlement agency in the DC Metro region for close to 30 years, Champion Title can make those last two decisions simple.  Read on to find out what owner’s title insurance is, if you need it, and which type is right for you.

First, what is title insurance?  Title insurance provides coverage against a loss that could result from liens, encumbrances, or defects to the title of a property.  In other words, it protects the holder of the policy from claims of ownership made by anyone else that pre-date title transfer to the policy holder.  A lender’s title insurance policy protects the lender and is typically required (if there is a lender in the transaction), while an owner’s policy protects the purchaser and is not required.  It is paid in a one-time fee at closing, rather than in monthly installments like some other types of insurance policies.

Second, why do you need it?  When closing on a new home, the title company performs a title search which should reveal any title issues prior to transfer of ownership to the purchaser.  So shouldn’t any and all title issues be discovered at that time?  In theory, yes.  However, in practice this is not always the case.  An owner’s title policy will protect you from claims an outside party may bring forward on your property during your period of ownership that may have been “unknown” at the time of title transfer.

Third, which type of owner’s title insurance is right for you?  Owner’s policies come in two versions: standard and enhanced.  A standard policy covers basic risks to title such as title ownership, public record errors, fraud, undisclosed heirs, and liens carried over from the previous owner.  Standard also offers continuation of coverage to anyone who inherits the property.  Enhanced provides all of this protection, with the addition of various other risk coverage such as access to property, building permit and zoning issues, encroachment, and more (for a full list of coverage on both standard and enhanced with comparison, please visit our website at https://www.championtitle.com/services/title-insurance/).  Enhanced owner’s title insurance will cost a bit more than a standard policy, and your title agent can help walk you through which option will be the best fit for you and your circumstances.

As experts in title insurance, Champion Title can guide you through this decision process, as well as answer any other settlement questions you might have along your home purchase journey.  For more information or questions regarding any of our services, please call us at (703) 444-4100, or visit our website at www.championtitle.com.