Because of the important role title insurance can play in a real estate transaction, it is likely that purchaser taking out a title insurance policy has questions about what it includes. What is covered by a title insurance policy is important for property buyers and sellers to be familiar with and understand.

In general, there are two types of title insurance policies to be familiar with, including the lender policy and the owner policy. One important distinction is that an owner’s title insurance policy extends longer than the limit of a lender’s policy, which only covers the life of the lender’s mortgage loan on the property. Once the mortgage loan is repaid, the lender’s title insurance policy terminates. A lender’s policy is also assignable to other holders of the same loan on the property. There are other distinctions as well between owner’s policies and lender’s policies it can be helpful to be familiar with.

It is also helpful to understand how a title insurance policy will treat a title dispute. Those involved may decide to pay, or they may decide to fight the dispute. It is useful to read title insurance policy documents and be familiar with how disputes will be handled. Title insurance protects against problems that may be contained in the deed but have not yet been discovered. It also makes delivery of marketable title easier which means that the title is reasonably free of litigation. This is an important component of a real estate transaction.

Because of the value of title insurance to a successful real estate transaction, purchase or sale, it is helpful to be thoroughly familiar with what it includes. Potential buyers should understand the title insurance process and what it covers when endeavoring into a real estate transaction.