What Is Title Insurance, And How Does Is It Different From Other Insurances?

What is title insurance, and how does is it different from other insurances? Title insurance assures the buyer that he owns his land. It protects you against any problems that may arise out of defects in titles. There are two kinds of policy. One is Owner Title Policy. The other is Mortgagee Title Policy.

Title insurance is very unique. Most insurance is insuring some event that may happen in the future, such as fire, or hail, but title insurance reveals past events that have happened to the land. Title insurance insures that you are the record owner of your home. The primary purpose of title insurance is to eliminate risks and prevent losses caused by defects in title arising out of past events. When someone wants to buy a home, they want to be sure that they will own the property. They also want to know that there are no outstanding debts on the property that the seller has not told them about. There also may be divorces or other legal problems that are not revealed. It insures that you own the property subject to listed exceptions which are shown on the Owner Policy of Title Insurance.


Title insurance is a one time premium. It is not like any other kind of insurance that you might have to pay monthly or annually. It has to be paid one time up front when it is issued. The title industry in Texas is regulated by the Texas Department of Insurance. No matter where you are in Texas, we go by the same rates. Rates are fixed and forms promulgated by that entity. The State Board of Insurance licenses title companies. We all have to be bonded and have an agent's license. We are obligated to go by the rate rule. So no matter what title company you go to, will be the same. It is based on the sales price. For a policy as low as ten thousand dollars, the rate may be as low as two hundred and thirty seven dollars. I strongly recommend that the buyer or seller would go by and he would look at the rate schedules card from any title company or any bank, and they would know how much their different policies would cost them.


There are two types of polices. One is called the Owner Title Policy. This one insures the purchaser that he owns the property subject to any exceptions that are listed on his title insurance. The other type of insurance is a Mortgagee Title Policy. It insures the lender which is usually a bank, savings and loan association, mortgage company, or an individual. This policy insures that the lender holds a valid lien against the property.

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