If you're a prospective home buyer, chances are you're considering getting title insurance, or are curious about its necessity.

Is this form of insurance a must-have and what does it accomplish? When you buy a home, you are essentially taking title to that property and title insurance protects that title against fraud or defects that can affect the ownership of your property.

Coverage for the past, present, and future

The scope of title insurance is fairly broad since it protects against things that may happen in the future – like someone stealing your identity and removing equity from your home, while also protecting your title for things that may have happened in the past – like old instruments on your title that were not properly discharged.  

It even protects against some misconduct of the previous owner.  If the previous owners did not remit property tax as they claimed to on closing, title insurance would ensure that those unpaid taxes did not end up as a lien on your property.

Among other things, title insurance protects against zoning issues, existing work orders, certain encroachments and set-back violations.  

If you already have a policy, it is always a good idea to read it over so you under not only what it covers but also what is not covered as well (flood damage, work orders arising out of work you completed on the property yourself, environmental hazards etc.)

How can I get title insurance?

Title insurance is typically arranged by your lawyer when you purchase your property, but existing owner policies can be issued as well. 

When you refinance your home, lenders will generally require you obtain a title insurance policy on their behalf. These policies are called lender policies and only protect the lender in case of any defect or fraud related to your title. 

In order to ensure you, as homeowner, are protected you need to obtain a homeowner’s policy.  Homeowner’s title issuance requires a one time payment, and your coverage is as good for as long as you or your heirs own the property. Every time you refinance – even if it is with the same lender – you need to purchase the lender’s policy - usually for around $160. Homeowner’s policies start at about $380 for a house and $200 for a condo, though a premium is added for homes valued in excess of $500,000.

Is title insurance a must?

Does the law require you get a homeowner’s policy?  The answer is no.  

Your solicitor may be able to provide you with an opinion on title instead. An opinion, however, does not protect against any future fraud related to your title and may not be the best option for your purchase – it is important to talk with you lawyer about your options to ascertain the best option for you.  

Keep in mind that even if you do not arrange a policy for yourself, your lender may require a policy for themselves. 

Lastly, there are a variety of providers in the market. Find out which company your lawyer is using and why. You want your lawyer to arrange the best possible coverage for you so have a conversation with your lawyer about which companies they arrange title insurance with. 

Not all companies are created equal and it is important you work with a lawyer to ensure you have the best coverage possible.

The above does not constitute legal advice and does not create a lawyer-client relationship and is only provided as general information.