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What is title insurance?
What is a certificate of title?
Why purchase title insurance?
How are title insurance premiums calculated?
How much coverage should be purchased?
Is there any way to save on title insurance rates?
How long does title insurance remain in effect?
What is an exception on a title insurance policy?
What is an endorsement to a title insurance policy?
What is title insurance?
This is an insurance policy which covers the title to real property. It may list the property owner or the lender as the insured party. It specifies that if for any covered reason the title is defective, the company will correct the title or pay the insured party up to the amount of the policy, usually equal to the purchase price (for property owners) or the mortgage amount (for lenders).
What is a certificate of title?
A certificate of title is a written opinion on the status of the title to real property based on public records. The opinion can be written by a Title Company, licensed abstractor, or an attorney. A certificate of title does not guarantee the title, it merely gives an opinion of the title. Title insurance guarantees title.
Why purchase title insurance?
The property in question may have a past with shady dealings, forgeries, divorce claims, or other peculiarities. There may be outstanding claims and rights which cannot possibly be determined from the deed alone. Title insurance provides protection from any claims out of the past.
How are title insurance premiums calculated?
The title insurance premiums are based strictly on the amount of coverage provided. The premium is paid only once, at the time the property is purchased or when the mortgage is refinanced.
How much coverage should be purchased?
In the case of an owners policy being issued at the time of purchase, the policy should be for no less than the stated sales price. When a policy is being issued, but is not in relation to a sale (i.e. issued at the time the mortgage is being refinanced) the best "valuation" would be the appraised value.
When issuing a loan policy, the insured amount should be no less than the principal amount of the loan. Where the loan is a negative amortization loan or other form of graduated payment loan, the principal amount of the loan may actually increase before it begins to decrease. Therefore the lender may request to insure up to 125% of the principal loan amount.
Is there any way to save on title insurance rates?
Yes, most companies offer a discounted rate, also known as a "reissue rate" on a property which had a previous title insurance policy issued. The previous policy must be supplied at the time the new policy is being requested.
How long does title insurance remain in effect?
The protection provided by title insurance continues as long as the insured party owns the property. Even when an insured dies, his/her heirs or devisees remain protected under the terms of the policy.
What is an exception on a title insurance policy?
A condition of the property that a title policy will not insure, sometimes called uninsured exclusions.
What is an endorsement to a title insurance policy?
An endorsement is used to amend coverage provided in a policy. An endorsement can either extend additional coverages to the insured or limit certain coverages provided in the policy. Most endorsements extend coverage, and many require the payment of a fee which is not part of the premium.