Choosing the Right Title Insurance Policy

Title insurance is a crucial part of the home-buying process, offering protection against potential legal issues related to property ownership. Selecting the right title insurance policy can seem complex, but understanding your options and what to look for can help ensure you make the best choice.

Here’s a guide to help you choose the right title insurance policy for your needs.

Understand What Title Insurance Covers

Title insurance protects against losses from defects or issues with a property's title that were unknown at the time of purchase. These can include issues such as undisclosed liens, fraud, or errors in public records. It’s essential to understand that title insurance covers past issues, not future ones.

Know the Types of Title Insurance Policies

• Owner’s Title Insurance: This policy protects the buyer’s interest in the property. It covers any claims or legal issues from title defects discovered after the purchase. An owner’s title insurance policy provides peace of mind by ensuring the buyer has clear property ownership.
• Lender’s Title Insurance: Most lenders require this policy to protect their investment in the property. It covers the lender’s financial interest in case of title issues. While this policy is important, it does not protect the buyer’s interests, so purchasing owner’s title insurance and lender’s title insurance is often recommended.

Evaluate the Coverage Offered

Different title insurance policies may offer varying levels of coverage. Reviewing the policy details and understanding what is covered and what is excluded is crucial.

Common coverages include:

• Errors or Omissions: Protection against mistakes or inaccuracies in the public record
• Unknown Liens: Coverage for any undisclosed claims against the property
• Fraudulent Claims: Protection against fraudulent claims or activities affecting the title
• Undisclosed Heirs: Coverage if a previously unknown heir claims ownership

Be sure to ask about any exclusions or limitations in the policy. Some policies may not cover certain issues, such as zoning disputes or property damage, so understanding these details is essential.

Consider the Policy Amount

The amount of coverage provided by the title insurance policy should match the value of the insured property. Typically, the coverage amount is equal to the property's purchase price. However, it’s wise to confirm that the policy amount is sufficient to cover any potential issues that may arise.

Consult with Real Estate Professionals

When choosing a title insurance policy, real estate agents, brokers, and attorneys can provide valuable insights and recommendations. They can help explain the coverage options and guide you toward a policy that meets your needs.

Reach out to a service provider like First Montana Title Company of Hamilton Inc. to learn more.