What To Know About Buying Title Insurance

3 Min Read
Published Oct. 11, 2023
Agent reviews title insurance documents with man and woman at the kitchen table of an empty home.
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Insurance always is something you buy in the hope that you never have to use it, and title insurance — which can save your entire home purchase from unexpected legal peril — is no exception.

What Is Title Insurance?

Title insurance is a policy that protects the mortgage lender or the homebuyer from financial losses due to unexpected or unknown title problems. The policy insures against faults in the property title search that was done during the most recent transfer of ownership.

What Does Title Insurance Cover?

Even if the title search is clear when you buy a home, problems can crop up later. Perhaps the details of the title search missed a lien against the property, or a previous owner’s heir produces a will that shows the property was left to them as an inheritance. Title insurance will help pay off liens and settle legal battles so you don’t have to.

Types of Title Insurance

There are two types of title insurance: lenders title insurance and owners title insurance.

Lenders title insurance

Homebuyers typically are required to buy lenders title insurance. This policy protects the lender from unknown title defects. It does not protect the buyer.

Owners title insurance

Buyers have the option to purchase owners title insurance, which will protect them in the case of title problems. If you have such a policy, it typically will pay unknown liens for you, or any legal expenses required to resolve an ownership dispute.

Most lenders allow and even encourage buyers to go shopping for title insurance during the closing process to find a policy that protects their interests.

If you pass on owners title insurance and title defects come to light later, you’ll be responsible for paying to resolve those issues yourself.

How To Shop For Title Insurance

If you need to shop for title insurance, start by asking your mortgage lender. The lender can give you names for title insurance companies in your area. You also can search for title insurance companies online or ask around for recommendations.

How Much Does Title Insurance Cost?

The national average is about $1,000 for title insurance. The cost will vary depending on your state and the value of the property.


Check out the answers to common questions about buying title insurance.


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