Title insurance is a guarantee against financial loss from claims, valid or invalid, against real property.
There are two kinds of title insurance policies: an Owner’s Policy and Lender Policy.
- The Owner’s Policy is issued at the time of your purchase and lasts for as long as you or your heirs have an interest in the property.
- A Loan Policy protects the lender’s interest in the property should an issue with title arise. Most lenders require a Loan Policy when they provide you a loan that is secured by a mortgage. The Loan Policy protects the lender, not the buyer, and the amount of coverage decreases along with the balance due on the loan.
Title insurance protects the biggest investment of your life from potential loss due to title issues. Possible hidden title issues can include forgery; undisclosed heirs and properties owned by minors.
A title insurance policy will provide the protection you need and the assurance that your title company will stand behind you if a covered title problem arises after you buy your home. HNT will be there to help pay valid claims and cover the costs of defending an attack on your time.
Agencies often have the ability to use different underwriters to formulate the best possible insurance product for the client. Agents live and work in the communities they service. This gives them a familiarity with the properties they insure, allowing them to identify local issues that may affect title, and address them using their background of local area expertise.
The premium is based on the policy amount (usually sales price) and varies based on rates filed by each underwriter with the Indiana Department of Insurance – See Senate Enrolled Act 370, eff. July 1, 2013.
Administrative costs may also be charged. The premium is a one-time cost, and is only paid at the time the policy is issued. A reissue discount may be available, if the property was previously insured.
As a property owner, coverage would be provided in an owner’s policy, insuring you as the title holder. Coverage continues as long as you own the property. If you have a mortgage, your lender will probably require an lender’s policy, insuring them, as to their lien interest. This loan policy can be issued simultaneously, at a nominal charge. Other policies that are available are for purchasers on land contract, and for tenants under an extended lease.
Title insurance covers claims that arise in the future for acts that happened before you bought your property. This could include a claim by an undisclosed heir, forged or fraudulent documents in the past, an unpaid lien from a previous owner, lack of access to the property, or errors in public documents that lead to boundary disputes.
If the policy is being issued for the purchase of a new home, a copy of the executed purchase agreement should be provided. A copy of the prior title policy should also be provided, to be eligible for a discounted premium. If the transaction is more complicated, then additional documentation, such as a survey, or copies of tax bills may be required. After the search and exam is completed, then additional requirements could be made to clear title.
Residential homeowners may be eligible for a homeowner’s policy that provides some additional coverage, subject to specific limits and deductibles, for things like covenants and restrictions enforceable by a homeowner’s association, encroachments by a neighbor, or some zoning issues. The homeowner’s policy may continue coverage if the property is transferred to related parties, like additional family members or to a family trust.
Special coverage endorsements may be available, at an additional cost, covering issues specifically related to a particular property, like a condominium, or property accessed via a private easement instead of a public street.