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Discover how a title insurance policy protects the ownership of your property. Explore the different types of policies, such as lender's and owner's title insurance, and understand how title insurance safeguards your interest in your home. Learn about the comprehensive coverage offered by the First American Eagle Owner’s Policy.
Buying a home is a significant financial decision and a major investment. However, some buyers may not be aware of the importance of a title insurance policy. While it may not be top-of-mind for some buyers, title insurance plays a crucial role in safeguarding your ownership rights.
Specifically, your title or legal ownership of real property can fall victim to a variety of risks, or title defects, that can threaten your ownership rights and can cost thousands of dollars in legal fees to resolve. These risks can include a prior unreleased mortgage, outstanding tax liens, or an undisclosed easement.
This is because even though your home may be new to you, every property has a history. And, in some cases, that history may include title issues that, can be used to challenge your property ownership rights. You don't want a problem that occurred long before you bought your property to deprive you of ownership or your right to use or sell the property.
Generally, title insurance offers protection to an insured for certain adverse matters that could arise in connection with the property's title. With title insurance, the insurer would pay valid claims and legal fees to defend against covered title issues.
Specifically, there are two types of title insurance policies – an owner’s policy and a lender’s policy. An owner’s policy insures the homebuyer’s ownership interest and the lender’s policy insures the lender’s security interest. As a buyer, an owner’s policy of title insurance can be an invaluable way to safeguard your investment and ownership rights in your property.
Who pays the cost of title insurance can depend on a variety of factors such as the type of policy (owner’s or lender’s policy), the state where the transaction is taking place, and what's negotiated in the contract. For a lender’s policy, the cost of title insurance is generally borne by the borrower. For an owner’s policy, the cost of title insurance can be negotiated into the terms of the purchase agreement.
The amount of protection available to a homebuyer can also vary depending on the type of owner’s policy they get. At the most basic level, a homebuyer can get an ALTA Standard Owner’s Title Policy, which provides certain baseline coverages. Alternatively, Endpoint also offers The First American Eagle Owner’s Title Policy with a higher level of protection, where available. The Eagle Owner’s Title Policy not only provides expanded coverage, but it also provides you with peace of mind. **These policies may not be available in every state. Check with your local representative to discuss which policy is best for you.
For example, a Standard Owner’s Policy generally will not provide protection for adverse matters that take place post-policy or after the date your deed is recorded. Therefore, some benefits you get under the Eagle Owner’s Policy that you won’t get with a Standard Owner’s Policy include coverage for post-policy forgery, post-policy encroachments onto your property, and post-policy adverse possession claims. In these cases, an Eagle Owner’s Policy may cover losses incurred where someone forges a signature on a title document, builds an improvement on your property, or attempts to claim ownership of your property through physical possession even if the violation occurs after the policy is active.
In addition to the added protections mentioned above, the Eagle Owner’s Policy provides numerous other benefits to homeowners.
An Eagle Owner's Policy insures you forever, even after you no longer have title to the property. In contrast, a Standard Owner's Policy only insures you as long as certain conditions are met (e.g., you retain an interest in the property, have given warranties after conveying your interest, etc.). Additionally, the amount of insurance under an Eagle Owner's Policy automatically increases in value up to 150% over five years to hedge against inflation. In comparison, the amount of insurance under a Standard Owner's Policy remains the same even if the property value increases.
A fuller comparison of the protections available under the Standard Owner’s Policy and the Eagle Owner’s Policy can be found below:
Protecting your ownership rights is crucial, and having the right protection in place can make a significant difference. With the Eagle Owner’s Title Policy, you not only gain peace of mind, but also safeguard your investment.
Learn more about how Endpoint can simplify your title and settlement experience.
