Knowing the Differences Between Owners and Lenders Title Insurance

December 21, 2022

The US title insurance market value is $22 billion. The demand for title companies grows as the market changes. If you are in the process of buying a home, it's important to understand the differences between owner's and lender's title insurance.

Both of these insurance types are an important part of a real estate transaction, but how you handle and pay for title insurance has its differences. Below, we discuss what you need to know about owner's and lender's title insurance.

Differences in Owner's and Lender's Title Insurance 

Title insurance is a type of insurance that protects the lender from financial loss in real estate transactions. The owner of the property and the lender are insured with title insurance. The main difference between the two types of insurance is who it covers.

Owner's Title Insurance Coverage

Owner's title insurance covers the owner of the property in case of a title issue. This type of insurance is completely optional. It is a one-time payment that protects your interest in the property for as long as your, or your heirs, still own the property.

Owner's title insurance covers the owner’s legal interest in the property. There can be any number of prior problems that remain undisclosed even after the most careful search of public records.  These prior hidden “defects” are very dangerous and sometimes are not discovered for months or even years after you purchase your home. The Owner’s Policy helps protect you against covered losses and prior defects and provides legal defense for covered risks.

Title Insurance Coverage for Lender's 

Lender’s title insurance is a form of protection for the lender and an important part of the mortgage process. Lenders title insurance (LTI) protects lenders against losses due to defects in the title. This includes things such as easements, covenants, and other rights-of-way that standard property policies may not cover.

Lender's title insurance is a requirement by most US lenders in real estate transactions.

The lender's insurance protects the lender’s interest in the property.

Similarities of Owner's and Lender's Title Insurance

Both of these insurance policies protect the insured from financial losses due to title problems. These problems include things like liens, back taxes, or anything else that may impact the transaction.

What Are Real Estate Title Services?

Title services are a type of service that deals with the transfer of ownership of real property. It is often used when buying or selling a home. Title companies are responsible for ensuring that the title is clear and free from any liens.

Speak to a Real Estate Title Company Today 

Now you understand the differences between owner's and lender's title insurance. We hope this article cleared up any misconceptions you may have about title insurance. Sometimes it's difficult to know which you need.

If you are confused or have more questions, we are here to help. At Emerald Coast Title Services, we have years of experience helping lenders and owners navigate real estate transactions. Contact us today to speak to a title agent.

Questions? Contact Us!

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