What Owner's Title Insurance Covers

Most likely there are no hidden risks connected to your new property. However, such risks do exist, often as a result of errors made during past title transfers.

If an error occurred but is not discovered until you buy the property, you may face a hidden risk and your ownership of the property could come into question. Owner's title insurance protects you from such errors, as well as:

* Protects you from financial loss due to covered claims against your title, up to the face amount of the policy.
* Pays your legal costs if the title insurance company is required to defend your title against covered claims.
* Pays successful claims against your title, up to the face amount of the policy.
* Continues protection after you no longer own the property. 

Here are a few of the most common hidden risks that can cause a loss of title or create an encumbrance on property:

- Forged deeds, releases, or wills
- Undisclosed or missing heirs
- Liens for unpaid estate, inheritance, income or gift tax
- False impersonation of the true owner
- Confusion caused by similiar names
- Signatures of minors or persons who are not mentally competent
- Signatures of persons represented as single but who are acutally married
- Errors in recording legal documents
- Clerical errors in public records
- Invalid documents executed under an expired power of attorney
- Fraud
- Invalid divorces
- Unpaid child support lien
- Unpaid taxes (local, state, federal)
- Unrecorded easements (right of way) 

Title Insurance Tips

If you decide you want owner's title insurance, companies offer "simultaneous issue credit" as long as you buy the owner's insurance within 30 days of closing (and buying the loan policy). Simultaneous issue credit decreases the amount of your premium.

If the house you are buying was owned by the seller for only a few years, check with the seller's title company. You may be able to get a "re-issue rate," because the time between title searches was short. If no claims have been made against the title since the previous title search was done, the insurer may consider the property to be a lower insurance risk.

Look for an "owner's title policy" with as few exclusions from coverage as possible. Exclusions are listed in each policy, and if a policy has many exclusions - that is, situations under which the insurer will not pay for your title problems - you may end up with little coverage on the property.