Frequently Asked Questions about Title Insurance
Do I have to have title insurance?
All mortgage lenders require that they must be insured by a title insurance policy that is equal to the amount of the loan that they are granting. This is to protect the lender in the event that any issues arise from the title.
Does title insurance do anything for me as a property owner?
An Owner's Title Policy will help protect you for the full value of your home. Depending on your agreement with the seller of a property, they may pay for part of the policy (or all depending on the area of Florida where you live) as part of their agreement to deliver to you clean title.
Does the Lenders Title Policy protect me at all?
Title Policies are considered a form of indemnity. They are designed to specifically protect against a loss. In the case of title policies, a Lender's Policy protects the lender from any loss that they suffer in the event of a defect in the title.
What period of time is Lenders Title Insurance valid for?
Title insurance protects against losses from events that occur prior to the date of the policy. Coverage basically ends the day that the policy is issued; it begins backwards in time to cover an undetermined period of time (i.e. through the date of any found error in the title).
How long is the coverage for Owners Title Insurance?
Owners' protection lasts as long as the owner or their heirs have any interest in or obligation to a piece of property - beginning when ownership occurs and ending only when the property is sold. Let's for instance say you have your basement remodeled and you paid to have the remodeling done but the contractor you hired failed to remove the lien he placed on the property. You may be required to prove that lien has been satisfied prior to selling the property, but if the lien isn't discovered until after you've sold the property the new lender is protected by their new policy.
Are there claims I'm not protected against even with title insurance?
Yes, for instance let's assume you have had your identity stolen and someone takes out a mortgage on your property without your knowledge. Many states do not offer coverage for this in a standard title insurance policy. An ALTA Homeowner's Policy will cover this. The same would hold true if your neighbor built a fence and the fence was on your property - this adversely affects your deed as the survey no longer matches your deed specifications. This is also not covered under a standard policy.
Does title insurance coverage increase if my property value increases?
If you purchase a rider or if you have an ALTA policy there may be increases in value built in. Be sure to check the terms and conditions of your policy carefully to see if there are increases or you may want to extend your coverage or take out a new policy.
Do I need a new policy if I refinance?
While you do not need a new owner's policy when you refinance, the lender will require you to get a new lenders policy. This may be true even if you keep the same lender because title issues can be disclosed at any time and a new mortgage will result in a new search for liens and other encumbrances. If you are keeping the same lender, ask about possible discounts.
Does Title Insurance Protect against loss of Marketability?
No. If a title claim arises Title Insurance does not afford you the ability to sell your home without the claim being resolved first. Keep in mind the insurer is going to want to minimize the cost of any claim while you are interested in settling immediately making both parties interests clash.
Is title insurance cost the same everywhere?
In Florida Title insurance premiums are set, but other title related charges can vary so it would pay you to search for a complete package price.
Are Title Insurance Premiums tax Deductible?
They are not.