Some kinds of insurance, you can buy or pass up. Some you don't have a choice. One of those is title insurance, which your mortgage lender will require when you buy or refinance a home. The price of a mortgagee title policy, which protects the lender, is part of the closing costs on your real estate deal. Title insurers and agents differ from one another almost entirely in quality of service. Premiums are uniform from company to company. They are set by the Commissioner of Insurance based on the price of the property to be insured. You pay the full premium at closing, and the policy is good for as long as you own the property. If you refinance, the lender probably will require a new policy, but with a premium discount if your original mortgage is less than seven years old.

There are two types of title insurance policies: a lender's policy (also called a loan policy) and an owner's policy. The lender's policy financially covers the amount of a loan and provides protection to the lender. A lender's policy does not usually represent the full property value. An owner's policy protects the landowner and can financially cover the full property value. While a loan policy is often required as a part of a real estate transaction, an owner's policy is generally considered optional. With an owner's policy, the landowner is protected against any title loss, which ensures the value of the property. Because a title policy is considered insurance, if a claim is made against the title, the title insurer must pay any and all costs associated with defense against the challenge, and if unsuccessful in that defense, reimburse the landowner for any reduction in the value of the land. Who Pays For Title Policy Insurance?

1. This depends on your local custom.
2. It can differ from county to county, but it is also negotiable in the purchase offer.
3. Sometimes sellers and buyers split the fee for the owner's policy.
4. Typically, the buyer pays for the lender's coverage.

How Long Are Title Policies Good For? Forever, theoretically. If you are planning to resell the property within a couple years, ask your title company about "binder" coverage. Most companies will sell you a binder policy for 10% more. A binder is good for two years, often can be extended beyond that time, and the fee charged for the new buyer's policy will be the difference between what you bought the property for and the price at which it sold. In other words, you will get a credit for the amount of coverage you purchased under your own Owner's Title policy.