Title insurance is a policy issued by a title insurance company that provides you legal and financial protection against hidden risks unknown at the time of the property purchase. Any hidden risks (e.g., forged or missing documents, mistakes in recording legal documents, and liens for unpaid estate, inheritance, income, or gift taxes) could potentially lead to loss of title to the property and a significant financial loss. Title insurance will pay for defending you against any lawsuits attacking the title as insured, and will either clear up title problems or pay the insured's losses. For a one-time fee, a buyer's title insurance policy remains in effect as long as the insured, or the insured's heirs, retain an interest in the property, or have any obligations under a warranty in any conveyance of it. If the title looks good why do I need title insurance? Because no one is perfect. Even an expert title examiner can miss a defect that might crop up to create problems for you later.

What does the policy cover? Problems that did not show up during the title search or were missed by the examiner. Errors in public records. The policy will pay your legal fees if you must go to court to defend your deed. If you lose the property the insurance will pay you for the loss. What isn't covered? A title insurance policy does not cover defects that occur after you purchase the property. Policies often exclude problems having to do with easements, mineral and air rights, and liens. Be sure to ask for an explanation of all exclusions, and a recommendation as to which items should be cleared up prior to closing.

WHY DO I NEED TITLE INSURANCE? When you buy a home, or any property for that matter, you expect to enjoy certain benefits from ownership. For example, you expect to be able to occupy and use the property as you wish, to be free from debts or obligations not created or agreed to by you, and to be able to freely sell or pledge your property as security for a loan. Title insurance is designed to cover these rights you bargain for.