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How Many Types of Title Insurance Are There?

There are so many factors that need to be addressed when transferring a piece of real estate from one party to the next. Sometimes, these factors can interfere with the transaction and halt it altogether. Other times, they don’t show up until years after the deal has been closed.

Title insurance is a tool used to protect new homeowners against anything missed in the title search.

While it is optional (though highly recommended) in many states, title insurance is mandatory throughout the state of Florida. So, when you get to closing, you will be required to pay the premium for your policy - and will reap the benefits of its protection.

But, did you know there are different types of title insurance?

Two Main Types of Title Insurance

There are two main types of title insurance: owner’s title insurance and lender’s title insurance. Each provides protection against anything missed in the title search, but the party they protect differs. Let’s take a closer look.

Owner’s Title Insurance

The buyer will obtain a title insurance policy to protect their rights to the property - and this is known as an owner’s title insurance policy.

Moving into your new home and getting life started there can be exciting. Unfortunately, unexpected issues can pop up when you least expect them - including a missing will, an existing lawsuit, forged deeds, etc.

Each one of these things, as well as others, can put your property rights in jeopardy. However, with an owner’s title insurance policy, you won’t have to worry about wasting time, energy, or money in fighting the threats. Instead, you’d simply file a claim.

An owner’s policy is purchased with one premium payment at closing and it will offer you protection for as long as you (or your heirs) have an interest in the property.

Lender’s Title Insurance

If you are taking out a mortgage on the property you are purchasing, then there is a good chance your lender will require that you purchase a lender’s title insurance policy. It is often a condition of the loan.

When a lender agrees to finance your purchase, they put a lien against the property that is enforceable. This is done to protect their interests due to the risks that they are taking. And, this is done after the title search so that they are confident they are in 1st position to get paid should something go wrong.

What happens if something gets missed in the title search? Another lien on the property that was missed in the title search could pose a significant threat to the lender. Therefore, a title insurance policy protects their interest.

The lender’s policy is tied to the loan. Once it has been satisfied, the title insurance policy will terminate. Of course, this also means that should you refinance, you will need to purchase a new policy.

Just like the owner’s title insurance, one premium payment at closing is all that is needed to put this policy into effect.

Title Insurance at Haven Title

Looking for a title company that is a breeze to work with? Going through the motions of a real estate transaction is already stressful enough. Let the title experts of Haven Title make the entire title process hassle-free for you.

If you’ve got questions about title insurance, we’ve got answers. Contact us today at (813) 699-3054.


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