Vocabulary: Title Insurance

The quickest definition of title insurance is that it is insurance to protect a lender or owner against loss in the event of a property ownership dispute.

I did not feel that this definition really encompassed exactly what title insurance is, so I asked Terry Monnie at Classic Title to help me out with a more complete definition:

Title Insurance insures either the lender or the owner against things that happened with that property’s title in the past (unlike other forms of insurance such as health or life insurance which provide coverage for future sickness or death). That is, on the date the commitment for title insurance is issued, the title insurance purchaser is protected against the hundreds of title defects that may or may not affect the insured property.

There are two primary forms of title insurance: a lender or mortgagee policy and an owner’s policy.
The lender or mortgagee policy protects the lender in an amount up to the principal loan amount. This coverage declines as the loan balance declines and is accordingly less expensive than an owner’s policy.

The owner’s policy will protect the purchaser/owner of the property up to the sale/purchase price, or more if improvements are contemplated

Both types of policies are one time premiums (you only pay once and it is good for life). There can be savings if the owner’s policy is purchased at or within 30 days of the closing.

In Ohio, all title insurance premiums are established by the Ohio Department of Insurance and no title agent can charge more or less for the premiums, even though other related charges may differ (e.g. title exam fees, etc.).

In a nusthell, it is an insurance policy that protects the policy holder against any problems that may surface with regards to previous owners on title for that particular property.


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