What Is Title Insurance and Why It’s Important?

If you're buying a home, especially for the first time, you’re probably hearing about a dozen different types of insurance, paperwork, and fees. One that often gets overlooked is title insurance. But skipping it could cost you big later.

Think of title insurance as a safety net for your home’s ownership. It protects you from problems in the home’s legal past that could become your problem in the future. That includes things like unpaid property taxes, missing heirs, or even paperwork mistakes.

Let’s break it down in simple terms.

What Is Title Insurance?

Title insurance protects you if there’s a problem with the legal ownership of your home.

When you buy a house, you expect to own it fully and without issues. But what if the previous owner had unpaid property taxes? Or what if someone else claims they inherited the home and never gave permission to sell it? These are title issues, and they can lead to lawsuits or even losing the property.

Examples of title problems:

• Unpaid taxes or liens

• Forged signatures on past documents

• Unknown heirs claiming ownership

• Errors in public records

This is very different from homeowners insurance, which covers damage to the house or belongings. Title insurance protects your legal right to own the home.

Why Do You Need Title Insurance When Buying a Home?

Most people assume if a home is for sale, it’s safe to buy. But even the best title searches can miss problems buried in old paperwork or legal history.

Here’s why it matters:

• It gives you peace of mind that no one else can claim the property

• It protects you if a legal issue shows up after you close

• It helps ensure the home buying process finishes with a “clean title”

Imagine you buy a home and, months later, you get a notice that a contractor placed a lien on the property years ago and was never paid. Without title insurance, that becomes your financial problem.

Types of Title Insurance

There are two main kinds of title insurance:

1. Lender’s Title Insurance
   This protects the mortgage lender. Almost all lenders require it. It doesn’t protect you as the buyer.

2. Owner’s Title Insurance
   This protects you. It’s optional—but strongly recommended. If there’s a dispute over the title, this policy can cover legal fees or even reimburse your home’s value.

Who pays for title insurance?
It depends on your location and what’s negotiated in your offer. In many areas, the seller pays for the owner’s policy, while the buyer pays for the lender’s title insurance as a closing cost.

How Much Does Title Insurance Cost?

Good news: It’s a one-time fee, not a monthly bill.

Most owner’s title insurance policies cost about $500 to $1,500, depending on:

• The price of the home

• Your location

• The title company you choose

It’s paid during closing, along with other closing costs. The peace of mind it offers is usually well worth the price.

How Do You Get Title Insurance?

You don’t need to shop for it separately—it’s usually included in the home buying process.

Here’s how it works:

• A title company or real estate attorney will search public records for issues

• If everything looks good, they’ll issue a policy

• You’ll pay for it as part of closing

Tip: You can ask to compare different title companies. Sometimes you can even negotiate who pays for the owner’s policy during the offer stage.

Tips for Homebuyers

• Ask questions if you don’t understand what’s in your policy

• Read the title report before closing—don’t just assume everything’s fine

• Work with a trusted title company that has experience in your area

• If you have a buyer’s agent, ask what they recommend for coverage

Common Questions

Is title insurance required?
Lender’s insurance is required by your mortgage company. Owner’s insurance is optional—but highly recommended.

Can I choose my title insurance provider?
Yes. You can ask your real estate agent or attorney for options. You don’t have to go with the seller’s pick.

Does title insurance cover future issues?
No, it only covers problems from the past that were missed during the title search.

What happens if something comes up after closing?
If you have owner’s title insurance, your policy can cover legal fees and even loss of the property’s value, depending on the issue.

Buying a home is one of the biggest investments you'll ever make. Title insurance is a small cost that offers big protection. It helps ensure the home you paid for is really yours, and stays that way.

Don’t skip it. Whether you’re buying your first home or your fifth, having title protection is a smart move that can save you from major headaches down the road.

If you’re not sure what’s included or who pays, just ask. Your real estate agent or closing attorney is there to help.