What Does Title Insurance Protect Against?

Title insurance is a type of insurance that protects property owners against potential losses resulting from issues with the title of their property. These issues can include mistakes in legal documents, fraudulent deeds, unpaid liens, and inadequate legal descriptions. Title insurance is designed to protect property owners from these kinds of issues that might arise when purchasing a property. In the event that there is a problem with the title of your property, your title insurance company will help cover any financial loss you may incur.

What Types of Policies are Available?

Title insurance policies are categorized into two types:

• Owner’s coverage: Owner's coverage protects property owners against losses resulting from ownership issues that occurred before they acquired the property, but were not known before they purchased it. This policy covers property owners for the risks listed in the coverage. There are separate policies for residential and commercial properties, with the T-1R covering residential property and the T-1 typically used for undeveloped or commercial property.

• Loan policy: Loan coverage is provided to the mortgage lender and protects them from losing their investment. This policy is valid until the borrower fully pays off their loan. Some of the risks covered by this policy include fraud, defects in administrative or judicial processing, documents executed under false or invalid powers of attorney, and impersonation.

How Long Will my Title Insurance Last?

Title insurance typically lasts as long as you or your heirs own the property. If you have loan coverage, it will last until you fully repay your mortgage. An owner's title insurance policy will remain in effect until you or your heirs no longer own the property. Some policies may offer warrantor's coverage, which provides protection even after you no longer own the land. It's important to carefully read the details of your title insurance policy to understand the specific terms and conditions of your coverage.

Do I Have to Renew My Coverage?

Unlike typical insurance types such as life, car, or home insurance, you only need to make one payment when closing on a property. You only need to pay a one-time premium, and the coverage benefits will stay with you and your heirs as long as you own the land. The policy will cover listed risks that arise after or before closing on your property.

What if the Title is Transferred to My children, My Trust, My LLC, or My Business?

Depending on the terms of your policy, you might not continue receiving coverage if you transfer the title to a trust, your business, or children. Check with your title agent, carefully read your policy, and contact a Texas title insurance attorney to understand your type of insurance.

Is Title Insurance the Same as Home Insurance?

No, title insurance and home insurance are different. Unlike home insurance, title insurance does not insure against theft, flood, fire, or any property loss or damage. It protects against losses arising from ownership issues before acquiring the property. However, it is not guaranteed to borrow money using it as collateral.

Contact a Texas Title Attorney Today

Protect your property against losses from inadequate legal descriptions, unpaid or unfiled liens, fraudulent deeds, and mistakes in legal documents. Contact our law office today to learn more.