Title Insurance

Title insurance is a type of indemnity insurance that protects the holder against financial losses arising from defects in the title (legal ownership) of a property. Unlike most insurance products that protect against future events, title insurance protects against past events — defects or claims that existed before you purchased the property but were not discovered during the title search.

When a property is sold, a title company or attorney conducts a title search — reviewing public records going back decades to verify that the seller has clean, unencumbered ownership to transfer. Title insurance covers risks that the title search may miss or that cannot be discovered in public records.

There are two types:

Lender's Title Insurance (required): Required by the mortgage lender as a condition of the loan. It protects the lender's security interest up to the outstanding loan balance. Coverage declines as the loan is paid down. When you pay off the mortgage, this policy terminates.

Owner's Title Insurance (optional but recommended): Protects the homebuyer's ownership interest for as long as they own the property and can be passed to heirs. The cost is a one-time premium at closing. This is the policy that protects you personally if a claim emerges after purchase.

Title insurance is always part of closing costs — use the Closing Costs Calculator to see how title insurance costs factor into your total settlement cash requirement.

Title insurance premiums are not formula-based — they are set by state-filed rate schedules based on the property's purchase price or loan amount. As a general estimate:

Lender's Policy ≈ Loan Amount × 0.35–0.55%

Owner's Policy ≈ Purchase Price × 0.25–0.50%

Combined estimate: Loan Amount × 0.50–1.00% (covers both policies)

Rates are higher in states without rate competition (Texas, Florida) and lower in states with competitive markets.

Home purchase price: $450,000 · Loan amount: $360,000 (20% down)

Estimated lender's title insurance: $360,000 × 0.45% = $1,620

Estimated owner's title insurance: $450,000 × 0.35% = $1,575

Combined title insurance at closing: ~$3,195

Note: Owner's and lender's policies are often issued together with a "simultaneous issue" discount — buying both at once is typically cheaper than the sum of two separate policies.

• Refinancing requires a new lender's policy: When you refinance, the new lender requires a new lender's title policy. A reissue rate (typically 40–60% of the original premium) is available if you refinance within 10 years with the same title company.
• Owner's policy protects heirs: Owner's title insurance coverage typically extends to heirs who inherit the property — it is not limited to the original purchaser.
• Simultaneous issue discount: When lender's and owner's policies are issued at the same closing, the combined premium is typically lower than purchasing them separately. Always get both from the same title company to capture this discount.
• Title search vs. title insurance are separate: The title search fee ($150–$400) is the attorney/title company's time to review public records. Title insurance is the indemnity policy — they are separate line items, both required.
• Negotiate who pays owner's policy: In many states, it is customary for the seller to pay for owner's title insurance as a selling cost. This custom varies significantly by region — in some markets, buyers pay for all title costs. Check your local market's norms and negotiate as part of your purchase offer.