Insurance that protects you (owner's policy) and the lender (lender's policy) from claims against the title that weren't caught in the title search. One-time premium paid at closing.
Title insurance is unique — it protects you against problems that already happened in the past but weren't found during the title search. A forged signature on a deed 40 years ago, a missing heir, a fraudulent transfer, an unrecorded lien — these are exactly the kinds of issues title insurance covers.
There are two policies you'll see on a typical purchase: Lender's title insurance (required by the lender, protects them up to the loan amount) and Owner's title insurance (optional but strongly recommended, protects you up to the purchase price for as long as you own the home).
Title insurance is a one-time premium paid at closing, no monthly cost. It's typically 0.5–1% of the home's price. The owner's policy is the one that protects you — it's worth the cost.
Example
On your $400K purchase, the lender's title policy costs $850 (paid at closing). You also buy an owner's policy for $1,400. Two years later, a previously unknown heir surfaces claiming partial ownership. Your title insurance defends the claim and pays your legal fees — a small premium covering a potentially massive risk.
Also known as
owner's title insurance, lender's title insurance, title policy