Title Insurance Explained: Owner’s vs. Lender’s Policy
Daniel ParkNo. 101
Updated
Key takeaways
- Title insurance protects against covered problems with ownership that existed before you bought.
- Your lender requires a lender’s policy. An owner’s policy is optional in Virginia but protects you.
- You pay once, at closing, and an owner’s policy lasts as long as you own the home.
- The premium is based on the price, so get quotes and ask about enhanced coverage.
Before you close, a title company searches public records to make sure the seller can sell and that there are no hidden claims. Title insurance covers the problems a search can miss.
What title problems look like
- A forged signature on a past deed.
- An unknown heir who claims an interest.
- An unpaid contractor’s lien or old mortgage that wasn’t released.
- Recording errors or incorrect legal descriptions.
Owner’s vs. lender’s policy
| Lender’s policy | Owner’s policy | |
|---|---|---|
| Required? | Yes, with a mortgage | Optional in Virginia |
| Protects | The lender, up to the loan balance | You, up to the purchase price |
| How long | Until the loan is paid off | As long as you or your heirs own the home |
What it costs
It’s a one-time premium based on the price. As an example, one Virginia title company’s published owner’s coverage rate was about $3,642 on a $750,000 home. Rates vary by company and coverage level.
Daniel’s tip: Ask about enhanced owner’s coverage. It often adds protection for things like certain zoning and building permit issues for a modest extra cost.
Estimate all of your closing costs, including title.
Frequently asked questions
Can I choose my title company?
In Virginia, buyers typically choose the settlement company. Compare quotes and service.
Do I need it on a new home?
Yes. Land has a history even when the house is new, and builders can have unpaid contractor liens.
Filed under Buying a Home, Money & Mortgages
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