Why Do You Need Title Insurance?

The vast majority of home buyers secure a mortgage to purchase a home. What you get when you buy a home is a title to that property, a legal document that gives you the right to possess that property.

To protect their investment – the mortgage – lenders require title insurance. Like any insurance, it’s designed to protect an investment from loss. Loss can be caused by a “defect” with the title, which means there could be an issue with who really owns the property you purchased.

Homeowners themselves are protected by an Owner’s Title Policy, which insures your equity in the property. Title insurance makes sure that you don’t lose money because of a defect.

While title defects are rare and might not show up for months or years, they can result in the loss of the property or an expensive lawsuit. Title experts say defects can include forged deeds or wills, undisclosed missing heirs, errors in public records or tax reports, mistakes in recording legal documents, and more.

Title insurance is designed to give both lenders and home buyers long-term piece of mind. Like any insurance policy, you hope you never have to use it. But if you ever do, you’ll be glad you were insured.