Title insurance provides protection against financial loss which could result from defects or claims against your property.
There are two types of policies: an owner policy, which provides protection to the property owner, and a mortgagee (or loan) policy, which offers protection to the mortgage lender.
These two policies are separate and distinct. If the lender requires title insurance as a condition of making a mortgage loan, it is the lender who is insured, not the owner, even though the lender’s title policy is usually paid for by the buyer.
If the owner wishes title insurance, a separate policy must be purchased.
The new owner can, however, reduce the cost by purchasing the two policies simultaneously. When an owner policy is purchased, there is no additional charge for a policy insuring the lender’s interest provided the amount of that policy does not exceed the amount of the owner’s coverage.
Why Title Insurance?
Title insurance provides two major benefits to policyholders, provided that coverage is triggered. First, it will pay to defend the insured’s title against claims of third parties. Second, it will pay for loss or damage caused by a defect in title and suffered by the insured to the extent of the policy limits.
While most defects are discovered by a title search, there are a number of “hidden defects” which neither the seller nor the attorney examining the title would discover, but which could affect your title. Examples of these are lost, forged or incomplete deeds; deeds executed by incompetent persons; incorrectly indexed deeds in the land records; claims of Indian tribes; some permit issues (on Expanded Protection policies). Title insurance covers such potential problems.
With the increasing complexity of real estate transactions and the number of claims that are being prosecuted for allegedly defective titles, we now recommend to all of our clients that they have an owner’s title insurance policy to be adequately protected.
Title Insurance Premium Quote: http://vermontattorneystitle.com/rate-calculator/