Title insurance insures against financial loss caused by defects in title to real estate. While a homeowner’s insurance policy protects against losses from a fire or other property damages, title insurance protects the title (or ownership rights). While the title search provides a thorough examination, property owners (lenders) are protected by the title policy in the event of undiscovered defects in the future.
Title insurance companies defend against lawsuits attacking the title, or in the case of a covered loss, reimburse the insured up to the policy limit. Unlike other types of insurance, there are no annual payments to keep your title insurance policy in force. The premium is paid once, at the time of the property purchase (during the closing).
Title insurance protects you against loss due to title defects, liens, or other similar matters as well as from claims of ownership by other parties. It protects you against losses from problems that arose before you purchased the property. The title company will defend you in court in the event there is a claim against your property. In such cases, the title insurance will pay for covered losses.
Columbus Title Agency are agents for First American and Old Republic Title Insurance Companies.
A loan policy lasts until the loan is paid off.
An owner’s policy lasts as long as you or your heirs own the land. It also may provide warrantor’s coverage after you no longer own the property, depending on your policy provisions. Policy language has changed over time, so read the continuation of coverage provisions in your policy carefully to determine coverage terms. Ask Columbus Title Agency to explain this to you.
No. Title insurance is paid for just once when you buy the policy unless you decide later to add more coverage.
Keep your policy, even if you transfer your title or sell the property. Coverage lasts as long as you or your heirs own the land, and may last forever for any title warranties made when you sell the property.
When you buy an owner’s policy and a loan policy at the same time, the loan policy is issued at a discounted price.
If you decide not to purchase an owner’s policy, you will pay full price for the loan policy.
Loan Policy: It does not protect you as the property owner! When you close on your mortgage loan, title insurance may be included in the amount you pay. Known as a loan policy, this type of title insurance covers the mortgage company for up to the full value of the policy if you are unable to pay your mortgage bills and the company suffers a loss.
Owner’s Policy: You can protect your own interest in the property you just bought with a policy called “owner’s title insurance.”
An owner’s title insurance policy describes the property and defines your ownership “limitations” — if any. The limitations could be in the form of existing liens or items disclosed to you before you agreed to the purchase. In other words, limitations you have accepted in buying the house.
Owner’s title insurance protects you against what you don’t know. It helps take the risk out of buying property whose legal history is long and may not be completely known to you. The so-called “hidden risks” covered by such a policy are not common, but they do exist. If your property’s ownership history carries such risks, you could lose the property and the money you paid for it. The mortgage company has a loan policy to protect its interest in the money it lent you. To protect your own interest in your new property, consider owner’s title insurance.
Unless your property purchase is clear of any mortgage (paying cash), the lender will require a loan policy. This is not the same thing as Mortgage Insurance.
Loan policies remain in effect until the mortgage is paid and the property deed is completely in the owner name or till the property is sold or refinanced.
In the State of Ohio, if you decide you want owner’s title insurance, companies offer “simultaneous issue credit” as long as you buy the owner’s insurance within 30 days of closing (and buying the loan policy).
Simultaneous issue credit decreases the amount of your premium. Remember any insurance policy is only as sound as the company that issues it.
It is likely there are no hidden risks connected to your new property. However, such risks do exist, often as a result of errors made during past title transfers. Many different people may have owned the land and buildings over the years and there was a chance for error each time the title was transferred. If an error occurred but was not discovered until you bought the property, you may face a hidden risk (see examples). Your ownership of the property could come into question.
Owner’s title insurance protects you from such errors. Title insurance also provides the coverages shown below:
- Protects you from financial loss due to covered claims against your title, up to the face amount of the policy.
- Pays your legal costs if the title insurance company is required to defend your title against covered claims.
- Pays successful claims against your title, up to the face amount of the policy.
- Continues protection after you no longer own the property
- False impersonation of the true owner
- Confusion caused by similar names
- Forged deeds and other documents
- Clerical errors in public records
- Errors in recording legal documents
- Undisclosed or missing heirs
- Invalid divorces
- Unpaid child support lien
- Unpaid taxes (local, state, federal)
- Invalid documents executed under an expired power of attorney
- Unrecorded easements (rights of way)
- Signatures of minors or people who are not mentally competent
- Signatures of people represented as single but who are actually married
You are covered for the value of your policy.
If you add major improvements to your home, or if your home increases in value over time, you can buy an increased value endorsement to cover the increase in your property’s value.