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Is Title Insurance Necessary?

Updated: May 4, 2023

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It can be very exciting to purchase a piece of real estate. Facing a long list of closing fees, though, is a different story.

If you find yourself questioning whether purchasing title insurance is a necessary expense, it is. And here’s why.

What is Title Insurance?

When you purchase a new home, you want to make sure the title to your property is free and clear. That means having no outstanding taxes, judgments, liens, and so forth clouding the title.

To confirm that the title is good to move forward with the sale, a thorough title search is done. Sometimes, however, things get missed. An encroachment, a missing heir, a forged document, an erroneously filed judgment, and the like can all appear as title defects in the future - posing risk to your property rights.

With title insurance, you are protected should any of these things arise.

There are two main types of title insurance, owner's title insurance and lender's title insurance. Both require just one premium to be paid at closing for the coverage to go into effect - and stay that way.

What Does Title Insurance Cover?

Title insurance protects you from things that happened in the past before you became the owner of the property. Unlike car insurance or life insurance which offer protection for things that may happen in the future, your title policy focuses on those that happened in the past.

Things that may have been missed on the title search, for one reason or another, may appear later on - after you have already had your closing. It could be a few days after you took ownership or it could be several years in the future. Either way, your title insurance policy will protect you as long as you or your heirs have an interest in the property.

Keep in mind that there are different types of title insurance that offer different coverages. You will want to discuss your options with your title agent so you can have peace with your new property.

Is Title Insurance Necessary?

An owner’s title insurance policy is not required. But if you ask anyone who has ever faced a title issue after they have signed the deed to their new home, they will tell you it is most definitely a good idea.

Consider getting settled into your new home only to receive a notice a few years later that there was a missing heir who is now claiming rights to the property - your property. What do you do? You will likely have to hire a lawyer and fight for what is yours. It may even turn into a lengthy and expensive legal battle without any guarantee you will win.

Of course, if you had title insurance, you’d simply just file a claim. Everything else will be handled for you.

Most would agree that title insurance is necessary.

If you are taking out a mortgage, your lender may require you to take out a lender’s title insurance policy. In fact, it is not uncommon for this to become a condition of the loan. They do this because they are taking a risk in giving you the money to buy the property and they want to protect their interests should something go awry.

So, if you ask a lender - title insurance is absolutely necessary.

Get Answers to Your Title Insurance Questions

Title insurance is necessary for anyone investing in real estate. Conestoga Title Insurance Co. not only issues the policies, but they can help explain how to get title insurance and how title insurance works. You’ve got questions and we’ve got answers.

To learn more, contact us today.

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