The Importance of Property Title Insurance

Insurance of any kind is one of the most important things to have in your life. It is the umbrella when it suddenly rains out of nowhere, the backup generator when all the power in your home has run out. It’s the preparation for the unexpected, and the unexpected can come up on us when we least expect it. But what exactly is insurance?

Key Points

  • Insurance serves as a financial safety net, offering protection or reimbursement against potential losses through a contractual agreement with an insurance company.
  • Premiums are periodic payments made to insurance companies, which in return cover you for specific risks, such as damage to property or health emergencies.
  • Property title insurance is a specialized form, safeguarding buyers and lenders from financial losses arising from defects or disputes in the title of a property.
  • Obtaining property title insurance involves costs ranging from $500-$3,500 and a thorough title search to identify any claims or defects that could affect property ownership.
  • While insurance is often mandated by law or lenders, it also provides peace of mind by mitigating risks that could result in severe financial burden.
A paper with insurance written on it next to laptop

What is Insurance?

Insurance, in its simplest terms, is a protection method against financial loss. It’s a contract, one that grants the claimant financial protection or reimbursement against potential losses from an insurance company. It is risk management in its finest form.

How Does it Work?

You make payments to insurance companies, often called premiums. In exchange for these payments, you are covered against certain risks from factors that are out of your control. The insurance you pay the premiums to then agree to pay you for losses that may occur. 

Why Should You Have Insurance?

Besides the umbrella of protection that it provides, insurance is a policy that is required by many providers to have. This includes the bank, your car, and especially a home. In addition to this, having insurance is required by the law. 

Requirements aside, it can also be a convenience, as insurance could protect you from financial losses that are beyond your control and beyond your ability to pay. For example, if your home were to burn down and you didn’t have insurance, you wouldn’t be able to collect payment in losses and would have nothing to gain. 

So that’s the basics of insurance policy out of the way. With that out of the way, we can talk more about the main topic of this article: property title insurance. This is a tool mainly used by realtors and those wishing to purchase property. 

It’s a bit more intricate than basic insurance, but I assure you it is nonetheless important when it comes to the task of protecting you and your purchase. So, let’s start with the first basic, but most important question to ask you, the reader: what exactly is property title insurance?

Development land for sale so property title insurance may well be required

What is Property Title Insurance?

Property title insurance, or just title insurance, is described as a type of indemnity that shields the lenders and homebuyers from financial losses; particularly losses taken from defects in titles to the property. This type falls into two separate subcategories, those being:

  • Lender’s Title- helps protect the lender against defects or disputes in the title to one’s property but doesn’t protect your stake in said property.
  • Owner’s Title- protects the owner. It is paid by the seller to help protect the buyer’s stake in the property.

How Does Property Title Insurance Work?

To purchase any real estate, a clear title (see more here) is required to do so. The title companies have to do a search on every title to check for claims that are against them. This must be done before they can issue them out. 

The search involves an inspection of public records to help confirm the property’s legal ownership and also help determine whether or not there are any claims to the property. If any of these are in violation or can’t be confirmed, then the property can’t be put up for sale. Some examples that can get in the way of confirming a title search are things such as building code violations or inaccurate surveys. 

Property title insurance helps protect both the home lender and the home buyer against losses or damages that are taken from encumbrances, liens, or defects in the property’s title or ownership. These can take the form of mortgage loans, back taxes, conflicting wills, or home equity lines of credit (HELOC)

Some other types of hazards property title insurance covers include:

  • Wrongful or incorrect signatures on documents, such as forgery or fraud
  • Flawed or incorrect records
  • Judgements and/or hindrances against the property i.e., lawsuits or loans
  • Ownership by another company or third party

How Do I Get Property Title Insurance?

While important, purchasing this can be a lengthy endeavor. First, there is the cost, as title insurance can range anywhere from $500-$3,500. This can be dependent on factors such as the state the property is in, the provider or insurance company you choose to go with, and the actual price of the property, among other things. 

After this, a closing agent must begin the process of getting the title insurance, after the purchase of the agreement of course. There are different companies that handle this process, but there are plenty of them that do so. One example is Primary Abstract, a company that deals with property title insurance and title services among other things.

After all of this is said and done, then there’s finally the purchase of a one-time fee, at which point the insurance is secured and the property can then be sold with peace of mind intact. 

Why Should I Have Property Title Insurance?

As mentioned earlier before there are risks without insurance, and property titles are no exception. Without it, the property to be sold can be under severe and even debilitating risks should any defect be found. If anything should go wrong with the sale, and the property is not ensured, then the burden of paying falls solely upon the buyer. 

With title insurance, this protects the buyer from such unfortunate circumstances. Not to mention it also covers the banks and lenders with an interest in the property. For more information on property title insurance, click on this website


In the game of protecting your interests and purchases, insurance is the way to win. Whether for cars or for homes, for your health or your property, having insurance is the shield that will protect you and yours for years to come. It may not seem like it now when you’re paying those fees and premiums, but you’ll be thankful for having it if it is needed.