Title Insurance

What is title insurance?

Title insurance protects you from losses that occur from various matters affecting the title to land. There are two basic types of policies: Owner’s policy to protect the owner, and Loan policy to protect the bank’s mortgage.

If the bank requires a Loan policy, why do I need to buy an Owner’s policy?

The bank’s policy only protects its interest. You, the homeowner, may be liable for title problems even though the bank is insured.

I paid for a title search- why do I need to buy title insurance also?

A title policy insures against many defects which could not be discovered in a title search, as well as insuring against errors made in the title search itself.

Is Owner’s coverage expensive?

No. a one time premium covers you throughout your ownership and after. When you are already paying for a loan policy, the additional cost for an Owner’s policy is usually small.

What’s Covered Under A Standard Owner’s Policy?

The standard Owner’s policy provides the basic coverage for a homeowner:
* It insures that you are the owner of the property.
* It insures against losses form any liens or encumbrances on the property except those listed in the policy.
* It insures against your title being rejected by a subsequent buyer because it is unmarketable due to a title defect or lien.
* It insures you have a legal right of access to the property.

The title policy not only protects you against losses due to title claims covered by the policy, it also pays for the attorney’s fees and cost in defending the title.  You are covered under the policy for as long as you own the property, and also for liability after you sell the property if you provide title covenants in your deed to the new buyer.

Title policies can contain enhanced coverage that includes:

Subdivision Law Violation Coverage
Coverage is provided where subdivision laws have been violated prior to the homeowner’s purchase and, as a result, the homeowner is unable to obtain a building permit, is forced to correct or remove the violation, or is unable to complete a sale or loan transaction. (The amount of insurance for this covered risk is subject to deductible amount and a maximum dollar limit of liability.

Building Permit or Zoning Violation Coverage
Coverage is provided in the event that the insured is forced to remove or remedy existing structures (other boundary walls and fences) because any portion was built without obtaining a building permit form the proper government office or because they violate an existing zoning law or regulation. (The amount of insurance for this covered risk is subject to a deductible amount and a maximum dollar limit of liability.)

Encroachment Coverage
Coverage is provided in the event that the insured is forced to remove existing structures because they encroach on a neighbor’s land. If such structures are boundary walls or fences, this coverage is subject to a deductible amount and a maximum dollar limit of liability. In addition, the policy provides coverage in the event the neighbor builds any structures after the policy date that encroaches onto the land (other than boundary walls and fences).

Enhanced Access Coverage
The insured is provided coverage if access to and from the land is not available from both pedestrians and vehicles.

Water & Mineral Rights Coverage
Coverage is provided for damage to existing improvements (or replacements or modifications made to them after the policy date) because of the future exercise of a right to use the surface of the land for the extraction or development of mineral, water, or other substances, even those rights are excepted or reserved from the description of the land or in Schedule B.

Supplemental Assessments Coverage
Coverage is provided with respect to supplemental real estate taxes not previously assessed against the land for any period prior to the policy date because of a change of ownership, new construction or use that occurred before the policy dated.

Map & Address Coverage
Coverage is provided to the insured when the map, if attached, does not show the correct location of the land, according to public record, and that a residence with the address shown in Schedule A is located on the land.

Continuous Coverage & Additional Insureds
The coverage remains in force forever and covers the insured as well as his or her heirs, the trustee of a trust created by the insured, the beneficiaries of the trust upon the death of the insured and the spouse of the insured who received the land because of the dissolution of marriage.

Inflation Coverage
The amount of insurance automatically increases at the rate of 10 percent per year (in each of the five years following the policy date) with a maximum of 150 percent of the original amount of insurance without payment of an additional premium. This protects new homeowners in the event of an increase in the value of their home by raising the limit of insurance protection.

Source — Information provided courtesy of Crescent Title and the law offices of BERGERON, DOUGLASS, FROSCH & MACK.

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