Title insurance simply makes sure that that your ownership rights to the property are protected from any type of liability arising the period before you bought. This is insurance policy which provides insurance for the period before you owned the home, unlike homeowner policies, which cover the period after you buy.
It happens all too frequently that someone will purchase a property and then discover that there is a lien against the property due to the actions of a previous owner. Certainly you do not want to be forced into having to cope with such a situation without the security provided by a title insurance policy. If you had been uninsured you would have been looking at a financial liability, which could be anything from a minor matter to a big legally enforceable obligation leading to having to sell or forfeit the property.
After you complete your home purchase, if it were to come to light that there was a lien for property taxes on it, title insurance would protect you from experiencing a financial loss from that situation.
Title insurance covers you against claims that might come up from situations related to the title of your home before you bought it. For example, if your home was sold to you in as part of a swindle or con with forged or illegal documents, your title insurance policy would cover you against loss you might otherwise incur. If disputes arise regarding the chain of ownership of the home you just bought, your title insurance policy would give you the coverage you need in such a situation.
What Title Insurance Is Not
Title insurance is not protection against things you might do yourself, to endanger your ownership. It is strictly limited to ensuring that you have a clear title to your home when you take ownership. If you don’t pay your taxes and a lien is filed, then you will still be responsible for settling the debt.
We should point out too, that title insurance does not cover any losses related to the actual structure or contents of your home. In addition to making sure that your title is clear with title insurance, you also need to take proactive steps to have insurance against theft and fire, and natural disasters with a homeowners policy. When you buy your home, both homeowners insurance and title insurance give you different kinds of coverage; you really need to have both.
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