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What is Title Insurance and Do I need It?

Adam Ripple

Title insurance is exactly what it sounds like; it is an insurance policy that protects the title to your property. More specifically, the insurance covers fraud or undisclosed interests. If someone claims an interest, title insurance will defend against the claim. Or if there is a loss (someone successfully has title to your property), title insurance will reimburse you up to the policy limit, which is typically the sale price you paid. There are two types of title insurance policies. If you have a mortgage, your lender will require you to buy lender’s policy that will protect the bank’s mortgage interest. In order to protect yourself though, you need to purchase an owner’s policy.

Asking whether you need title insurance is kind of like asking if you need homeowners insurance. You will probably never make a claim – but if you do, the small premium amount will be well worth it. If you suffer a loss and do not have insurance, you will certainly regret it because your home (or business or investment property) is commonly your largest asset.

An owner’s title insurance has a unique characteristic of standard exceptions to coverage. At no cost, the title agent will usually delete these exceptions from the policy upon request.

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