Quick answer
Title insurance protects against losses from problems with a property’s title that existed before you bought it, such as a previous owner’s unpaid taxes, a contractor’s unpaid bill or someone else’s claim to the home. Lenders usually require a lender’s policy; an owner’s policy, which protects you, is generally optional.
Two policies, two beneficiaries
| Lender’s policy | Owner’s policy | |
|---|---|---|
| Protects | The lender’s loan | You and your equity |
| Required? | Usually, by the lender | Generally optional |
| Shown on the Loan Estimate | Section B or C | Section H, “Other” |
| How it’s paid | One premium at closing | One premium at closing |
The lender’s policy does nothing for you: if a valid claim surfaces, you’re the one who must deal with it, and only an owner’s policy covers your stake. Who pays for the owner’s policy, buyer or seller, follows local custom and the purchase contract.
Shopping for it
The CFPB notes you can usually shop for title insurance separately from your mortgage, and buying both policies from the same company is usually cheaper than buying them separately. In a few states, including Texas, the state sets the premium rates, so the premium itself doesn’t vary between title companies. The title company also runs the search for existing liens before closing. Compare the totals in the closing cost calculator.
Related terms
Sources
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.