What Is Title Insurance?

Title insurance is an insurance policy purchased when you buy (or sometimes refinance) that protects your most important investment from issues prior to owning your home (see below for examples). Your policy covers the legal costs that could arise in the process of defending against these issues. A small investment goes a long way towards piece of mind!

What Title Insurance Protects Against:

Here are some examples of problems that could arise (and which would be covered by your title insurance policy):

  • Forged deeds, mortgages, satisfactions or releases of mortgages, and other instruments.
  • Defective acknowledgment due to lack of authority of notary. (Acknowledgment taken before commission or after expiration of commission.)
  • Mistake in recording legal documents. (For example, incorrect indexing or errors and omissions in transcribing, and failure to preserve original instruments.)
  • Special assessments where they became lien upon passage of resolution and before recordation or commencement of improvements for which assessed.
  • Recorded easement, but erroneous ancient location of pipe or sewer line which does not follow route of granted easement.
  • A prior seller has fraudulently sold the property to more than one buyer.
  • The boundaries may be incorrect and part of the property may actually be owned by an adjacent neighboring property owner.
  • There may be an easement burdening the property which limits the uses and thereby decreases the value of the property.
  • Structures on the property may encroach onto valid easements or an adjacent property.
  • There may be an older unrecorded deed transferring the property which is now recorded.
  • The seller or prior seller may have outstanding personal judgments which could attach to the property.
  • Foreclosure sale issues

Wondering how much title insurance coverage you need? When you purchase your home, the policy coverage will be the same as the sales price. When you refinance or otherwise mortgage a property, you will purchase a title policy for your lender that is the same as the loan amount. When you purchase and simultaneously mortgage, you will receive a discount on your second policy.

How To Get Estimates on Title Insurance

To get an estimate of how much your title insurance will cost, once you determine the coverage amount; find out what the rates are in your state and if they are regulated. (See example below.) You cannot cover only a portion of the loan; however, if your property value increases during the life of the loan, you may choose to purchase more title insurance.

      Title insurance rates in the state of Florida are $5.75 for each $1,000 dollars of coverage from 0 to $100,000 dollars of coverage, and $5.00 for each $1,000 dollars of coverage between $100,000 dollars to $1,000,000, and $2.50 per $1,000 from $1,000,000 to $5,000,000, and so on.

Florida’s rates are used in the example below.

For a policy in the amount of $100,000:
$100,000/$1,000 = $100(5.75) = $575.00 (price of your title insurance)