What is Title Insurance?
Title insurance protects the real estate purchaser from fraud, forgery of paperwork, liens, unpaid taxes, or any other issues against the title after the real estate transaction. There are two types of title insurance:
1. Lender’s Title Insurance: Protects the lender and is paid at closing.
2. Buyer’s Title Insurance: Optional and protects the buyer from title defects.
In this article, we will focus on buyers/owners title insurance.
Note: Title insurance is different from title lock insurance, which is a service that monitors your title and informs you once your title has been compromised. It’s important to distinguish between the two if you’re in the market for title insurance.
Who Needs Title Insurance?
Having title insurance provides a layer of protection in case of issues with your title in the future. For example, a homeowner in Louisiana had her identity stolen, and her land was sold to unsuspecting investors. Months later, she is still trying to clear her title. If the property owner had title insurance, she would have had the financial protection needed to combat this issue.
For more on this story, check it out here: https://nypost.com/2025/02/17/real-estate/woman-reveals-how-property-was-stolen-in-identity-theft-real-estate-scam
Real estate investors should also consider title insurance to ensure the title is free of defects, especially when purchasing foreclosed properties. Although title searches are part of the closing process, they are not infallible.
According to Investopedia, owner’s/buyer’s title insurance can cost anywhere from $500 to $3,500, depending on your state and the value of your property. This cost may be well worth it, especially if you are one of the 9,521 people who were victims of real estate fraud in 2023, according to the FBI Internet Crime Report.
Out of approximately 84 million homeowners, 9,521 may not seem like a large number, but given the severity of the situations and the costs for any individual victimized by this sort of fraud, you may want to consider getting title insurance protection for yourself.
Where to Buy Title Insurance?
Major title insurance companies include:
- Fidelity
- American Title
- Old Republic
- First American
- Stewart Title
You can also purchase title insurance from real estate attorneys, title companies, or local title insurance companies.
How to Get the Best Title Insurance Rates?
Much like any other purchase, shop around for the best rates. Additionally, ask for any qualifying discounts and check reviews.
In Closing
Use free services to monitor your identity and your deed. You can check the status of your title anytime with your state’s land records office. Some land records offices even have alerts you can request in the event of an ownership change. Furthermore, the Federal Housing Finance Agency (FHFA) has programs to protect homeowners against title fraud.
Monitor your credit report regularly to catch any changes or errors. Also, consistently monitor your bills for any changes, including receiving new bills claiming to be a second mortgage against your home.
If someone has stolen your title and committed fraud, they may also have stolen your identity. If you suspect or have become a victim of identity theft, first file a police report. Another step is to visit https://www.identitytheft.gov. This government resource will guide you through recovery steps and provide you with sample letters.
Fraud and theft aren’t going away anytime soon, and we must remain educated and vigilant to protect ourselves and others. Although we may never experience this type of fraud based on today’s statistics, it’s better to be safe than sorry.
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