What Is Title Insurance? 

When you buy real estate (a house, condo, commercial building, etc.), you’re not just buying the building—you’re buying the legal right to own and use that property.

Title insurance protects you (and your lender) from financial loss if someone later challenges your ownership or if hidden problems with the “title” (the legal ownership record) surface.

There are two main types:

Type           Who It Protects         Who Usually Pays For It       What It Covers

Owner’s             You, the buyer                              Almost always the buyer (or negotiated)                   Problems discovered after you buy, for as long 

Policy                                                                                                                                                        as you or your heirs own the property

Lender’s            The bank/mortgage lender           Almost always the buyer (required by lender)       Same risks, but only protects the lender’s interest

Policy

Why Do You Need It? (Real Risks That Happen More Than You Think)

The county records can be wrong or incomplete. Common hidden title problems include:

• Forged deeds or mortgages in the past

• Unknown heirs or ex-spouses who claim ownership

• Old liens or judgments against previous owners (tax liens, contractor liens, etc.)

• Clerical errors in the public records

• Fraud (someone sold the house they didn’t actually own)

• Undiscovered easements or encroachments (e.g., neighbor’s garage is actually on your land)

If any of these pop up after closing, fixing them can cost tens or hundreds of thousands in legal fees—or you could even lose the property. Title insurance is the only way to protect yourself.

How the Process Works (Super Simple)

1. You open escrow and order title insurance (usually through a title agency or attorney).

2. The title company does a thorough title search (50–100+ years of records).

3. They issue a preliminary title report/commitment showing what’s found (liens, easements, etc.).

4. You (or the seller) clear any issues before closing.

5. At closing you pay a one-time premium → coverage lasts forever (owner’s policy).

How Much Does It Cost? (2025 ballpark)

• It’s a one-time fee paid at closing.

• In most states it’s regulated and based on purchase price.

• Rough U.S. averages:

  • $500–$1,000 for a $200k house

  • $1,500–$2,500 for a $500k house

  • $3,000–$5,000+ for $1M+ properties

• Often you can get a “simultaneous issue discount” (20–40% off) if you buy owner’s and lender’s policies from the same company at the same time.

Owner’s vs. Basic vs. Enhanced/Extended Policies

• Standard (Basic) Owner’s Policy – Covers the most common risks listed above.

• Enhanced/Extended/ALTA Homeowner’s Policy (costs ~20–30% more) – Adds extra protections popular today:

  • Post-policy forgery or impersonation fraud

  • Building permit violations from previous owners

  • Zoning violations

  • Encroachments discovered after closing

  • Automatic inflation coverage (policy amount increases 10% per year for first 5 years, up to 150% total)

  • Living trusts, water rights, etc.

Most buyers today choose the enhanced policy because fraud and encroachment issues have risen dramatically.

Key Takeaway

Buying real estate is usually the biggest investment you’ll ever make.

Title insurance is the safety net that makes sure you actually own what you just paid for—no surprises years later.

If you’re buying or refinancing soon and want to know exactly what’s covered in your state or how much it will cost for your transaction, feel free to send us the purchase price and state and we can give you a quick estimate!