Why do I need title insurance?
For most Americans, their home is the single largest financial investment they ever make. And while ownership of a home may seem straightforward, the rights to enjoy a property aren’t always as clear. There are literally dozens of ways in which a title to – and ownership of – a property can be jeopardized. Your house may be new but the dirt beneath it is very old.
Title Insurance Overview
The objective of title insurance remains the same as it has always been – to help the parties in real estate transactions determine their rights and interests and assure the land transfer is expeditious and secure. Protecting the parties involved in real estate transactions is the reason the product of title insurance was developed. In this country, matters affecting ownership and other real estate interests are entered in public records. Before a transaction is completed, a title search of the records can be made in an effort to locate potential problems so that they can be rectified and the sale can proceed.
Title Insurance Minimizes Risks & Claims
Since its inception, title insurance has offered protection that is significantly different from other lines of insurance. Typically, other types assume a particular risk and provide financial indemnity in the event the risk occurs. On the other hand, title insurance emphasizes loss prevention by eliminating risks caused by title problems arising from past events. Besides minimizing the possibility that title hazards will threaten ownership or use of property, the concentration on risk elimination greatly reduces the number of claims to be defended against or satisfied by the insurer. With other types of insurance, an annual premium is usually paid. For title insurance, it is a one-time fee paid at closing
The first step in the process involves a search of the public records to determine who owns the property, and what interests may already exist in that property. A title search entails examining the records in the offices of recorders or registers of deeds, clerk of courts and other municipal and county officials, or similar records housed in a title company’s "title plant". These records cover all recorded documents, judgments, liens, taxes, street easements, sewer assessments, special taxes and levies, and other mat