Many buyers don’t realize how many ways title insurance can protect them, or the options they have when choosing a policy.

Because title insurance rates are set by each municipality or other jurisdiction, price shopping isn’t generally a factor. But even though policies will cost the same from multiple companies, there are still important differences in policies and the title companies behind them.

Two Policies, Many Types of Protection     

Loan Policy. The mortgage lender will insist that the buyer purchase title insurance to protect the lender’s interests. Although the buyer generally pays for that policy, only the lender is protected. If something happens that affects the ownership of the home, such as an unpaid judgment against the seller, the lender will be made financially whole. The buyer will not.

Fee (Buyer’s) Policy. Title insurance is optional for buyers, but highly recommended. A buyer’s title insurance policy protects homeowners against anything that could affect the title (i.e., ownership), including:

  • Fraud by the seller
  • Judgments or liens against the seller
  • Confirmation of ownership

There have been many cases where a divorced spouse or long-lost relative still has some claim to the property. A contractor may have filed a lien against the property after not being paid. Someone may have been injured on the property and filed a lawsuit, or taxes may not have been paid.

Without title insurance, the buyer’s only recourse is expensive legal action and potential loss of the property.

Title Insurance Basics

Title insurance works differently from other types of insurance.

As mentioned above, title insurance premiums are set by New York State—or whichever jurisdiction has authority over the purchased property. Also, title insurance is a one-time fee paid at closing. There are no recurring fees or premiums. Finally, if the buyer makes a claim (more on that below), there is no deductible.

The Title Insurance Claims Process

If anything threatens the title (ownership) of a home and the homeowner must take legal action, the homeowner (or more often, the homeowner’s attorney) will submit a claim to the title company for reimbursement. Note that only actual financial losses are covered; there is no payment for the homeowner’s time or stress.

However, the title insurance policy isn’t backed by the title company itself, but by a national underwriter. In the unlikely event that the title company no longer exists when a claim is filed, the underwriter will still back the policy.

How Cornerstone Can Help Avoid Claims

As with all types of insurance, the hope is that the protection the insurance policy offers never needs to be used.

That’s why Cornerstone works overtime to protect buyers in two ways.

First, we provide the highest level of due diligence, searching obscure records and verifying judgments to help ensure that no obscure claims threaten the title to the property. We don’t just take the sellers’ word for it that an ex-spouse has renounced all claims to the property or that no liens exist.

Second, we add value for homebuyers from day one. Involve Cornerstone early in the buying process, and we can recommend vetted professionals for every type of real estate service. With the experience gained from over 16,000 transactions, we know which professionals share our values of efficient, ethical, responsive, and proactive service. We have no business relationship with the professionals we recommend and earn no commissions or fees.

There’s a reason why Cornerstone has a five-star rating from Google reviews. And because title insurance rates are set by the government, when you use Cornerstone, you don’t pay more. But you certainly get more. The earlier you include us in the buying process, the more we can help. If the American Dream of homeownership is important to you, please let us help you make your dream a reality.