Title insurance — a one-time premium for a lifetime of coverage
When considering whether to purchase an owner’s policy of title insurance, buyers frequently are confused as to what they are purchasing and how much it costs.
First, unlike a life insurance or health insurance policy, or even homeowners property and casualty coverage, an owners’ policy of title insurance is a one-time premium, typically payable at closing.
Second, the duration of that policy is a lifetime — not just as long as you own property, but forever. Why, one might ask, would you need owners’ coverage after you no longer own the property? A seller typically conveys property with certain title covenants — a general warranty deed or a limited warranty deed. Those title covenants give a buyer — and buyers all the way down the chain of ownership — the right to sue anyone up the chain about a title problem. One of the beauties of a title insurance policy is that the coverage applies to claims under those title warranties as well.
Also, at closing, against the cost of an owner’s policy frequently is credited the cost of the lender’s policy usually required by the lender, so the coverage is significantly discounted at that time.
So, when determining whether to “take” owner’s coverage, consider the real one-time cost of the premium , and the lifetime of benefit bestowed as a result.
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