Title Insurance: Safeguarding Your Investment

Purchasing title insurance is so common when real estate changes hands in the Florida and Fort Myers marketplace that it makes sense to learn more about it and understand exactly what its role is in your property purchase.

Title Insurance Protects Your Property

Title insurance is an indemnity policy that protects the owner against loss damages that may result from claims levied against a property. Like other forms of insurance, title insurance protects you from the unexpected. Once purchased, title insurance will protect the purchaser against any unforeseen claims from the past that may arise against their property for as long as they own it. The major difference between title insurance and all other forms of insurance is that it protects you backward in time, not forward, since the policy ends on the date of purchase and predates indefinitely. You will pay for your title insurance coverage once, at the property closing, and never again, unlike the other usual forms of insurance, which premiums are due annually.

The Title Search Plays An Important Role In The Title Insurance Policy

After an offer is made, accepted and escrow funds have been paid to your escrow agency, a title search will be performed by a real estate title company. The title company will do research to make sure the property is clear of liens and is genuinely available for sale. If issues are found that would limit a buyer's use of the property or if claims are found that need to be paid, it is likely that the seller would be asked to rectify them before the purchase can go through. However, even the best title searches can miss something or a lien that has no record could crop up in the future. If that were to happen, title insurance would protect you from loss damages resulting from the claim or lien.

Title Insurance Is Typically Mandatory

Around Florida and Fort Myers, title insurance is very common and is usually required. In cases involving a mortgage, you will be required to purchase a Lender's Policy for your mortgage lender. The Lender's Policy protects the lender against loss arising from unforeseen claims. This policy will cover the lender for loss damages up to the amount of the mortgage. Although, the buyer will purchase this policy, they are not covered by it and will need to purchase an Owner's Policy. Typically, the Owner's Policy can be added on to the Lender's Policy at a cost-savings, but depending on the county, the Owner's Policy could be a buyer or seller expense. Two policies are needed because they each protect a different party with interest in the property. The Owner's Policy does the same for the property owner. Although the lender only needs the title insurance to insure up to the amount of the mortgage, the owner will want coverage for the full value of the property.

Is Title Insurance Really Necessary?

You may be wondering why you need title insurance if the title search comes up clean. The answer is simple in that title insurance is insurance, first and foremost. By its very nature insurance protects you from the unexpected. Just as you will insure the property against future events and damages, with property insurance, you need to insure the property with title insurance to ensure coverage against past events of which you may have no knowledge.