Investing in a property is probably one of the most important investments you will ever make. When you buy a property, you will ensure protecting it through various means such as different insurance coverage. There are various insurance policies that serve different kinds of protections to your property, for instance, the homeowners’ insurance lends you a defense against theft, fire or wind damage while the flood insurance keeps you covered against damages coming from rising water. While these are the natural or artificial hazards, the title insurance is a one-of-a-kind insurance policy that safeguards you from the title hazards, which are hideous in nature and could threaten your valuable financial investment.
Title Insurance: A Flourishing Industry
As per the data publicized by Zillow, the aggregate home value in America has increased by $16,000 in the span of the last twelve months.(Zillow)[i] However, home values are not alone in enjoying the economic growth in the market, as they are being accompanied by title insurance, which is now a fifteen billion dollars worth industry and the numbers will keep on expanding through 2020. This makes it crystal clear why more and more homeowners are choosing to opt for title insurance. Hence, if you are about to invest in a property or decided to buy your new home, you should also have a brief understanding of the basics and importance of title insurance for your investment.
Who Acquires the Protection From Title Insurance?
Title insurance safeguards the insured party against claims for previous occurrences, making it quite different compared to those of traditional home insurance policies. In the present market, there are two various forms of title insurance that exist. A property owner can exercise his or her liberty to buy title insurance and lenders can also decide to choose since the lenders will need title insurance by mortgagors as a means of shielding their security interest present in the property. Moreover, a real estate owner will buy title insurance to secure their investment in their estate.
What is the Defense Mechanism That You Enjoy With Title Insurance?
Title insurance is astutely designed in such a manner that it will need a comprehensive search of the property or home that you are about to invest in. The main objective behind this search is to lower the potential liability to the homeowners by acknowledging any future title issues. Furthermore, once the investment is completed and a property owner is provided with the possession of the estate, the title insurance will render protection against any legal proceedings that challenge the authority and legality of the current property owner.
How Much Does it Cost?
In contrast to the traditional insurance companies that ask for monthly payment terms, the title insurance simply demands a one-time payment. This insurance policy varies in accordance with the valuation of your property, as well as, to the state that you will be investing in your new home. In other words, the title insurance policy for the lender will cost around $544 while for the homeowner it will around $834 aggregately.
Is Investing in a Title Insurance Worth It?
In reality, title insurance has been known for defending the interests of a great number of insureds; however, it really has not paid out that many claims. According to Forbes, an estimate of 4-5 percent of the title insurance policyholders have achieved their claims successfully.(Forbes)[ii] Nonetheless, these hazards protected by the claims were not possible to be identified by a normal investor. The homeowner purchasers would receive the complete immunity through title insurance. Some of the common types of claims in the title insurance include:
- Undiscovered Liens
- Omitted Heirs
- Errors in the Public Record
What Particular Claims does the Title Insurance Cover?
Some of the specific claims that are covered by the title insurance include particular errors that were committed while providing data into the public record. A title examiner will be directed to examine the title by evaluating the line of ownership of the property. The examiner will also verify whether the estate has been passed through will, sale or has been gifted to the intended and correct individual. In addition, a title check will be exercised to ensure that there are no present legal claims against the property along with various encumbrances such as mortgages, liens or anything that challenges the ownership and transfer of the house.
Ultimately, the title insurance is a valuable form of defense for real estate investors and homeowners. With title insurance, you will be able to protect your home against any challenges to your investment and ownership.