What is owner’s title insurance?

Help buyers understand what it is, why it matters, and how to explain it in ways that stick.

TL;DR: 

• One-time purchase that protects a buyer’s ownership rights.

• Covers risks like fraud, unknown liens, and errors in public records.

• Lasts as long as the buyer owns the home – no renewals or monthly premiums.

• Helps resolve title issues that may arise during resale.

• Essential protection for buyers, even though it’s not required.

When buyers hear the word “insurance,” they usually think about car accidents, health emergencies, or storm damage – not legal claims tied to the home they just bought. That’s why owner’s title insurance often needs a bit of unpacking. It’s one of the most important protections in a real estate transaction, and yet one of the least understood.

This short video is a great resource to help homebuyers understand title insurance and how it protects them.

The basics: What is owner’s title insurance?

Owner’s title insurance is a one-time purchase that protects the buyer’s ownership rights to a property against unknown or undiscovered title issues that existed prior to closing.

Unlike lender’s title insurance, which protects only the lender’s interest, an owner’s policy is the only coverage that protects the homeowner themselves.

What does it cover?

Owner’s title insurance covers a wide range of risks, including:

• Undisclosed or missing heirs
• Errors in public records
• Forgery or fraud in past documents
• Unknown liens or judgments
• Incorrect legal descriptions
• Improperly executed documents
• Restrictive covenants or easements not previously disclosed

If a covered issue arises after closing, the policy can cover legal fees, court costs, and even financial losses based on the home’s full purchase price.

One-time payment, long-term protection.

Unlike homeowners insurance, which requires ongoing premiums, an owner’s policy is paid only once, at closing, and lasts as long as the buyer owns the home – no monthly premiums, no renewals.

It’s a one-time investment that provides long-term peace of mind.

How to explain it to clients.

To a buyer already facing a stack of closing costs, an optional insurance policy may feel like just another upsell. As title professionals, we have the unique opportunity to help buyers understand why it matters. Here are a few approaches that help make the value of title clear:

• “It protects your ownership.” Most buyers don’t realize that title issues can result in partial or total loss of their property rights.
• “It covers what the title search might miss.” Even the most thorough title exam can’t predict a forged signature or a missing heir.
• “It’s the only thing protecting you.” Lender’s title insurance doesn’t cover the homeowner against loss – it only covers the bank. An owner’s policy is their personal shield.
• “It helps if you ever sell.” If a title issue comes up later during resale, the owner’s policy can step in to help resolve it.

Click here for resources that help you educate your clients on the value of title insurance.

Why it’s worth it.

Title issues aren’t always common, but when they happen they can be expensive, stressful, and complicated. On average, owner’s title insurance is just .7% of the house price, while giving buyers the confidence that if something from the past comes back to haunt them, they’re not on their own.

Owner’s title insurance isn’t required, but it’s highly recommended – and for good reason. It protects a buyer’s biggest investment from some of the most unexpected problems.

Interested in accessing more educational resources? If you’re a First American Title agent, click here to learn more about resources available through AgentNet Knowledge.

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