You’re probably familiar with homeowner’s insurance – it protects you against the possibility of future events such as fire or flood. Title insurance is similar in that it protects your home investment, but it protects you against loss from defects that already exist in the title, should your legal rights to your property be challenged. Those hazards could include outstanding mortgages, liens, easements or pending legal action.
The process of getting title insurance starts with a search of property records to eliminate risk and uncover any title defects before issuing insurance. If any defects are found, your title company would work to correct them whenever possible. Then upon closing, you would be issued a ‘clean title’ to the property. However, even with the best searches, hidden hazards (such as a forged signature or an unknown heir) can pop up after closing. That’s when title insurance comes into play, to protect you as long as you have a financial interest in the insured property. The title insurer pays for defending against an attack on your title as insured, and will either perfect the title or pay valid claims.