Loan Products · June 23, 2025
Title Insurance: What It Covers and Why It Matters
Title insurance protects against hidden defects in a property's ownership history. Here is what it covers, the two types, and why the owner's policy is worth every penny.
Title insurance is one of the least understood closing costs — and one of the most important protections you can have as a homeowner.
What Title Insurance Covers
When you buy a property, you receive the seller's title — their legal ownership rights. But ownership history can have hidden problems: errors in public records, forged documents, unknown heirs, undisclosed liens, boundary disputes, or fraudulent transfers.
A title search uncovers most problems before closing. Title insurance protects you from issues the search missed or could not have found.
The Two Types
Lender's title insurance: Required by virtually all mortgage lenders. Protects the lender's interest (the loan amount) against title defects. You pay for it at closing. It covers only the lender, not you.
Owner's title insurance: Optional but strongly recommended. Protects your ownership interest (the full property value) for as long as you own the property. A one-time premium paid at closing provides lifetime protection.
What Owner's Title Insurance Costs
Typically $500-$1,500 at closing (varies by state and property value). Some states have regulated rates. This one-time premium provides coverage for as long as you own the property — potentially decades.
Why Owner's Title Insurance Is Worth It
Title claims are rare — but when they happen, they can be catastrophic. An unknown heir challenging ownership, a forged deed in the chain of title, or a lien that should have been satisfied at a prior closing can all threaten your ownership.
The cost of resolving a title dispute without insurance can run $10,000-$100,000+ in legal fees. Owner's title insurance covers these costs.
Call HMS with title questions at 309-222-8286.