June 15, 2023

What is Title Insurance & Do You Need It?

Buying real estate is an expensive investment. Therefore, ensuring you are protecting your investment to the best of your ability makes sense. Property insurance is one way to protect your real estate investment that most people have some familiarity with. Title insurance, however, is quite a different story.


What is Title Insurance?

Title insurance is a type of insurance that protects property owners and lenders against financial losses due to problems with the property’s title or ownership rights. When you buy a property, a title search is done to verify that the title is clear from liens, encumbrances, or legal issues. However, there can sometimes be hidden defects or claims that aren’t uncovered during the search process.

A title insurance policy covers these potential defects in the title that were not discovered during the title search, such as undiscovered ownership claims, undisclosed liens, or forgery in the chain of title. It ensures that if a problem with the title arises after you purchase the property, you will get help covering costs associated with defending your ownership rights and receive compensation for any financial losses.


Do You Need Title Insurance?

Unlike property insurance in most cases, title insurance is not required when buying real estate. However, there can be many benefits to having title insurance. Whether or not you should buy title insurance depends on several factors, such as the type of property you are purchasing and the potential risks associated with the property. And in some cases, a mortgage lender may even require title insurance as a condition for approving the loan.

In general, it is a good idea to purchase title insurance if you are purchasing a property with any potential risks. This includes properties with a complicated ownership history or those that have had multiple owners. This will help provide peace of mind and protect you against any potential losses that may arise from property title problems.


Though it may not always be required, title insurance is an excellent way to protect your property investment and save you from costly legal battles and financial losses. Before deciding to forgo title insurance when buying a property, consult with your real estate lawyer and trusted local REALTOR® to make an informed decision based on your circumstances.