While most of us are familiar with insurance as a whole, there are a few specific differences that make title insurance a bit confusing. Let’s take a look at what sets title insurance apart from other forms of insurance and how it will benefit you.
Title insurance is a bit different from other insurances you will encounter, like life insurance or home insurance. While most insurances protect you against potential future events, title insurance protects you from the past events and from previous owners of the property. Specifically, title insurance protects against a variety of issues, sometimes called “defects”. Defects include another person claiming ownership interest, fraud, forgery, encroachment, improperly-recorded documents, and several other potential hiccups specified in the insurance policy.
The title insurance policy is created during the transaction of the property in question. A title search is conducted during escrow, which results in a preliminary commitment for title insurance that is issued to the customer for approval. After approval and the closing of escrow, the actual title insurance policy is created, so all parties are aware of the policy’s specifics. The policy will protect the buyer, seller, and lender from defects as specified in the policy.
Another key difference between title insurance and other forms of insurance is that title insurance is paid for once, at the close of escrow, instead of via monthly or annual premiums.
When choosing a title insurance company, it’s encouraged to shop around, comparing fees and services. Your lender or real estate professional may recommend a specific company, but it’s important to find a company that is right for you.
If you have a question about title insurance in the Seattle area let me know. I may be able to help. If not I will point you in the right direction.