What Is Title Insurance And Why Do You Need It
What is Title Insurance?
Title insurance is an exclusively American invention. Its purpose was well stated in the first advertisement for title insurance back in the late 1800s:
“This company insures the purchaser’s of real estate and mortgages against loss from defective titles, liens, and encumbrances. Through these facilities [the] transfer of real estate and real estate securities can be made more speedily and with greater security than heretobefore.” [circa 1876]
Protecting purchasers against loss is accomplished by the issuance of a title insurance policy, which states that if the status of the title to a parcel of real property is other than as represented, and if the insured suffers a loss as a result of title defect, the insurer will reimburse the insured for that loss and any related legal expenses, up to the face amount of the policy.
Title insurance differs significantly from other forms of insurance. While the functions of most other forms of insurance is risk assumption through the pooling of risks for losses arising out of unforeseen future events (such as death or accidents), the primary purpose of title insurance is to eliminate risks and prevent losses caused by defects in title arising out of events that have happened in the past. To achieve this goal, title insurers perform an extensive search of the public records to determine whether there are any adverse claims to the subject real estate. Those claims are either eliminated prior to the issuance of a title policy or their existence is excepted from coverage.
Why do I need Title Insurance?
Your home is the single most important and costly asset you will probably ever own. Problems with the title to your property can limit your use and enjoyment of real estate, as well as bring financial loss. Protection against hazards of title is available through a unique coverage known as Title Insurance. Unlike other kinds of Insurance that focus on possible future events and charge an annual premium, title insurance is a one time payment and is a safeguard against loss arising from flaws and defects already existing in the title.
Did you know that the Title industry helps strengthen America? Here are just a few examples: We protect children’s well-being. • Collect $325 million in past due child support annually enabling children to be properly cared for. We protect people from unseen dangers. • Work with law enforcement to prevent and apprehend people committing fraud through real estate transactions We help strengthen our nation. • Collect $1.75 billion in delinquent Federal taxes annually, lessening the tax burden for everyone
The title industry is an integral and vital part of our country’s real estate market that benefits us as individuals and as a country.