What Is Title Insurance?

Title Insurance is unlike other types of insurance because it looks back in time rather than forward. Unlike casualty insurance that assumes risks, title insurance is designed to prevent losses via an extensive investigation of prior events impacting the title including judgments and liens against prior owners. There are two types of title insurance policies. The first, Owner’s title insurance, protects the Buyer from defects in the title that occurred prior to the closing. The policy pays money to the Buyer should there be defects in the title such as a hidden mortgage lien or if the Seller did not actually own the home. The second type of insurance is called a mortgage title insurance policy. This insures the lender that their mortgage is a first or senior lien, subject only to the exceptions noted in Schedule B in the policy.