What title insurance actually covers — and what it doesn't

Two policies, two beneficiaries

A lender's policy protects the mortgage lender for the amount of the loan and shrinks as the loan is paid down. An owner's policy protects the buyer for the purchase price and lasts as long as you or your heirs hold an interest in the property.

If a lender requires a policy and you skip the owner's coverage, the bank is insured and you are not. That is the single most common misunderstanding we correct at the closing table.

What a policy typically covers

Title insurance is retrospective — it insures against defects that already existed on the day you closed, even if nobody found them then.

• Forged or fraudulent deeds and releases in the chain of title
• Undisclosed heirs or missing signatures on a prior conveyance
• Recording errors, misindexed documents and defective legal descriptions
• Unreleased mortgages, judgments, tax liens and mechanic's liens
• Easements or restrictions of record that were never disclosed
• The legal cost of defending your title, which is often the most valuable part

What it does not cover

Standard exclusions matter as much as the coverage grant. Read the exceptions in Schedule B of your commitment before closing.

• Defects created by you after the policy date
• Zoning and building code violations, unless an endorsement is added
• Environmental conditions and physical property defects
• Matters an accurate survey would show, unless survey coverage is obtained
• Rights of parties in possession that are not of record, when excepted

Why the premium is one time

Unlike homeowners insurance, title premiums are paid once at closing. There is no renewal, no annual bill and no escalation — the coverage runs with your ownership interest.