What is title insurance? Courtesy of Chris Keith, Mesa Realtor

What is Title Insurance?

Purchasing a home is probably the single biggest investment you will ever make. Before closing on your dream home, you will want to know that no other individual (or entity) has a right, lien or claim to the property. Title Insurance does just that.

Unfortunately, even if you do not want title insurance, the lender will always require it for the purposes of securing a mortgage loan. Perhaps you could avoid title insurance if you paid cash for your home, but for the low price of title insurance, the peace of mind is probably worth it!

Determining that your rights and interests to the property are clear is the business of a title insurance company.

When you pay your one-time title insurance premium (when you close on your home), you will receive continuous title insurance protection in an amount equal to the purchase price of the property or its current market value. This premium typically includes your owner's policy as well as the lender's policy.

The advantage of having title insurance is that prior to a policy being issued, the title insurance company does extensive research into relevant public records, maps and documents to trace ownership of the property and determine if anyone other than you has a legal interest in the property. Through its research, the title insurance company can usually identify any title problems that could arise and have these problems cleared prior to closing of escrow (COE).

Your title insurance policy will describe the property and outline any recorded limitations on your ownership. It will also set forth the title insurance company's responsibilities should any claim covered by the policy arise. Typically your title insurance will protect you from loss:

if someone contests your title in legal action (the title insurance company will defend the title at no expense to you or your family);
or if there is a title defect that cannot be eliminated (the title insurance company will protect you from financial loss - up to the amount of the entire amount of the policy coverage).