One of the things people want to know about title insurance is what does my premium really pay for? An important part of title insurance is its emphasis on risk elimination before insuring. As the policy holder this gives you the best possible chance for avoiding title claim and loss.

Title insurance begins with a search of the public land records affection the real estate concerned. Next an examination is conducted by the title agent or an attorney on behalf of its underwriter to determine if the property is insurable. This examination is intended to fully report all “material objections” to the title. Many times documents that don’t clearly transfer title are found in the history that is assembled from the records in a search, often referred to as the chain. Some examples of documents that can present concerns are:

  • Incorrect notary acknowledgements
  • Outstanding mortgages and judgements, or a lien against the property because the seller has not paid his/her taxes
  • Easements that allow construction of a road or utility line
  • Trusts, wills, and deeds that contain improper wording or incorrect names
  • Pending legal action against the property that could affect a purchaser

Title problems are disclosed, through the search and examination, so they can be corrected whenever possible. However, even the most careful preventative work cannot always locate all the hidden title hazards. Hidden hazards can come to light after closing, resulting in unpleasant and costly surprises. A few examples of these are:

  • Mistakes in the public records
  • Forged signature(s) on the deed, which would mean no transfer of ownership to you
  • Instruments executed under a fabricated or expired power of attorney
  • An unknown heir of a previous owner who claims ownership of the property

Title insurance offers you financial protection against these and other covered title hazards. The title insurer pays for defending against an attack on the title as insured, and will either perfect the title or pay valid claims at an all for one time charge at closing. Your home is your most important and valuable investment. Before you go to the closing table ask about your title insurance coverage and be sure to protect your home with an owner’s title insurance policy.