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Unlike homeowner's insurance, which focuses on future events and charges an annual premium, title insurance charges a one-time premium and safeguards against loss from hazards already existing in the title.
The two basic kinds of title insurance are lender, or mortgagee, protection and owner's coverage. Most lenders require the former as security for their investment. Owner's title insurance lasts as long as you, the policyholder, or your heirs, have an interest in the insured property.
Stewart Title Guaranty Co., a leader in real estate information, advises potential homeowners to ask their real estate professional about owner's coverage and confirm that it will be included in the contract.
Insuring a home's title begins with a search of public land records. The title agent, or attorney working on behalf of the title underwriter, examines documents, such as deeds, wills or trusts, to determine whether the property is insurable.
When title problems are found, they are corrected, whenever possible, to avoid future claims. According to a recent survey by the American Land Title Association (ALTA), title problems consistently arise in 36 percent, or more than one out of every three, real estate transactions.
After search and examination, title problems may still be hidden or missed, such as a signature forged on a deed, or an unknown heir might step forward to claim ownership. In each of these cases, a title insurance policy will offer financial protection (subject to the policy's terms and conditions). The title insurer defends the title and "perfects" the title or pays valid claims.
With title insurance, you have financial protection against covered title hazards for your most important investment.
For more information, visit the Web sites at www.ALTA.org or www.stewart.com.
Because a home is often your single biggest financial investment, it pays to
protect it with title insurance.
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