What Does Title Insurance Cover?

Imagine sunlight streaming onto your patio, highlighting the beauty of your new home. Now, imagine discovering a hidden legal issue tied to the property’s past ownership. That’s where title insurance steps in to protect your investment. Unlike most insurance policies that guard against future events, title insurance shields homeowners from issues tied to the home’s previous owners. While not mandatory for buyers, it’s often required by mortgage lenders and highly recommended for peace of mind. Let’s break down what title insurance covers—and what it doesn’t.

What is Title Insurance?

When you purchase a home, you’re not just buying the property—you’re also securing the legal right to own it. But what happens if past issues, like unpaid taxes or an undisclosed heir, surface and challenge your ownership? Title insurance acts as a safeguard against such surprises, ensuring your rights and financial investment are protected.  Typically the Seller will choose the Title Company, or the Mortgage Lender if it's a refinance.  If you've had a great experience and you'd like to use your trusted Title Company, ask your Realtor to write it in to your purchase agreement!

Title insurance covers:

• Claims against your ownership rights: Protects you if someone contests your legal ownership of the property.
• Legal costs: Helps pay for attorneys if you need to defend your title in court.
• Financial reimbursement: Covers losses related to past issues up to the policy limit.

With title insurance, you can focus on making your house a home without worrying about hidden threats to your ownership.

What Title Insurance Doesn’t Cover

While title insurance is invaluable, it’s not a catch-all. Here are a few key exclusions:

• New Issues After Policy Issuance: Problems like unpaid contractor liens after your policy starts aren’t covered.
• Owner-Created Issues: Any title defects caused by you (e.g., taking out a second mortgage and failing to pay).
• Legal Violations: Noncompliance with zoning, building codes, or other laws.
• Current Occupants' Rights: Claims from tenants or others occupying the property.
• Condemnation: Losses due to government action or land being declared unfit for use.
• Natural Water Rights: Disputes related to lakes, rivers, or other bodies of water on or near the property.
• Disclosed Restrictions: Covenant rules you agreed to when purchasing the property.

What Does Title Insurance Cover?

Title insurance protects against issues tied to the property’s history, including:

• Unpaid property taxes or liens
• Fraud or forgery in past deeds
• Conflicting wills or missing heirs
• Easements or encroachments
• Improperly recorded documents

In short, it covers many potential headaches so you can focus on enjoying your home.

Why Title Insurance Matters

• Protect Your Money: Avoid financial loss tied to previous owners' mistakes.
• Cover Legal Costs: Defense against ownership challenges can be expensive—title insurance helps with this.
• Peace of Mind: Feel secure knowing your property rights are protected.

Navigating Title Insurance with Confidence

A good Title Company understands the importance of safeguarding your investment. Title issues may not always arise, but when they do, having the right coverage can make all the difference. 

Timothy Vicsik
RE/MAX 100
www.ND-Condos.com
(574) 329-(574) 329-9587
Tim@TimVicsik.com