What is Title Insurance?

Purchasing a property is certainly one of the most important and priciest decisions you’ll ever make. Both the mortgage lender, as well as you, will want to make certain that the property does not have any claim or lein attached to it. Title insurance is an indemnity contract that covers the risks of defects or flaws that may be contained in the title or ownership of the property, registered or not in a public registry of property, causing damages to the insured. Coverage is permanent while the insured or his successors maintain an interest in the property.

There are standard policies for owners and creditors of properties, which are being governed by the American Land Title Association (ALTA) of the United States and the Superintendency of Securities and Insurance. The insurance company agrees to cure the default, or fix the problem in another way, by negotiating with third parties, or paying compensation to protect the insured. In addition, the policy requires the insurer to manage and pay for defending the insured in the event of a claim by a third party.

Who needs title insurance?

Lenders and buyers involved with property transactions require title insurance. Both need to make sure that the property has insurance against specific flaws in the title. Securities firms should deliver such insurance coverage under the policy’s provisions.

Exactly what does title insurance cover?

Title insurance offers protection against claims caused by various defects (as set out in the coverage). As an example claim, someone might claim to have a lease or a title granting them the privilege or possession to your property.

What kinds of coverages are available?

Title companies typically issue two kinds of coverages: An “owner’s” coverage which covers you for as long as you own the house; and a “lender’s” coverage which covers the priority of the lending company’s security interest on the claims that others may have in the house.

What protection am I getting with my title policy?

The title insurance policy provides for payment of legal fees in case of a claim filed against the insured property. It additionally provides for compensation against losses which result from a claim that is covered. There is a premium paid at the beginning of the transaction. There are not any continuing premiums due, like other forms of insurance.