Title insurance shows up on your closing disclosure, gets paid, and disappears. No one explains it. Most people don’t think about it again unless something goes wrong.
But this isn’t a throwaway line item. Title insurance is one of the only things protecting your ownership from legal problems that didn’t start with you. It’s what stands between you and someone else’s paperwork mistake becoming your financial liability.
This guide explains what it is, how it works, and why you need it.
What Title Insurance Actually Covers
Every property has a legal history. Ownership transfers. Deeds. Liens. Court judgments. Recording errors. Title insurance protects you from the issues buried in that history. These are the problems that can threaten your legal right to own the home.
If someone claims they inherited the property. If a lien was never paid off. If a signature was forged years ago. Title insurance is what keeps those issues from landing on your desk.
It’s not like homeowner’s insurance. It doesn’t protect against future damage. It protects against past mistakes.
Two Types of Title Insurance
There are two common types:
- Lender’s Policy – Protects the bank’s investment. It’s required if you’re getting a mortgage.
- Owner’s Policy – Protects your ownership and equity. It’s optional but critical.
Lenders always get coverage. The question is whether you protect yourself.
Not sure who issues these or how they’re managed? Read What Does a Title Company Actually Do? for more.
What Can Go Wrong (And What’s Covered)
Title insurance covers issues that the title search missed or couldn’t fully clear. Common risks include:
- Forged deeds or signatures in the chain of ownership
- Recording mistakes or public record errors
- Missing heirs or unlisted prior owners
- Clerical mistakes in legal property descriptions
- Liens that were unpaid or undisclosed
If something comes up, the policy covers legal defense, court costs, and any approved settlement or loss.
Still wondering how those issues sneak through? See What Are Title Services? for the process behind it.
What’s Not Covered
Title insurance doesn’t protect you from issues you created after closing. It won’t cover:
- Code violations you caused
- Liens you agreed to
- Title issues you were told about but ignored
It only protects against unknown or undisclosed problems that existed before the policy began.
Real Examples of Claims
These are based on real cases:
- A loan payoff wasn’t properly recorded after a refinance, making it look like two mortgages existed.
- A forged deed allowed a seller to transfer the property. The true heir later brought a legal claim.
- A contractor lien was filed under the wrong name and missed during the title search.
In each case, the owner’s policy covered attorney fees and resolved the dispute.
Why the Owner’s Policy Matters
Lender’s policies are mandatory. Owner’s policies are not. But if anything goes wrong, the lender is already protected. You are not.
The owner’s policy is a one-time fee. It lasts as long as you own the home. And it protects against the most expensive kind of risk: legal problems tied to someone else’s past.
What Happens If You Don’t Have It
If someone challenges your title and you don’t have coverage, you’re on your own. That means hiring an attorney, paying court fees, and risking your equity.
Even if you win, you’re out thousands. If you lose, you might lose the property entirely.
Title Insurance in Florida
Florida closings add more risk. Recording errors, unfiled municipal liens, and deed formatting rules vary by county. A mistake can get recorded and become your problem.
Even a clerical error or a skipped lien search can invalidate the title. If you’re uninsured, you’re stuck.
Final Thoughts
Title insurance isn’t about probability. It’s about exposure. One bad filing from a decade ago can cost you your house.
If you want someone to walk through your policy or confirm your home is properly protected, contact us.
If you want to preview the cost at closing, use our rate calculator.