What is title insurance and why do I need it?

Title insurance is an insurance on your property that protects you, the title owner.

There are a few types of policies.

If you have a mortgage, most likely your mortgage company has required title insurance to protect them for their vested interest.

That title insurance does NOT protect you.

You would need OWNER’S title insurance.

So, again, what is it?

Owner’s title insurance is an insurance, paid at closing, that covers YOUR financial stake in the property you just bought.

It covers items that were not found through a title search. This includes fraud, mortgage liens, encroachment issues that weren’t found before, identity theft, and other issues that could cloud the title.

Title insurance just helped a client of mine where they were selling their house, and apparently the mortgage from the previous owner was either not paid off or not recorded as being paid off. If the owner had NOT had title insurance, this issue would have been THEIR problem — meaning, the cost of tracking down whether it were paid off, OR having to get the mortgage paid off, recorded correctly, etc, would have been THEIR expense. Instead, this was the expense of the title insurer. This potentially saved the seller/owner thousands of dollars.

Here is more information in a Washington Post article about title insurance. Here is a link to a brochure about title insurance with details from the Maryland Insurance Administration.

The other thing to understand is that there are different types of policies available. There is at least a standard policy and an enhanced policy. It depends on your Maryland title company what is in each policy and what is covered by the policies. Make sure to ask your title officer what the difference between their policies are, and what the price difference is for the coverage.

Title insurance can be a very important insurance for your home. Be sure you understand about title insurance when you buy a home in Baltimore!