Frequently Asked Questions
This section gives you answers to the questions we hear most often from home buyers.
Am I legally required to have title insurance?
You are not legally required to have title insurance. If you pay cash for your property you could do without it, but you would leave yourself open to a potentially devastating loss if the property turns out to have a defective title. If you carry a mortgage, the lender almost always requires you to buy a loan (or, lender) policy to protect its interests.
How much title coverage do I need?
Generally, your policy should provide coverage in an amount equal to the purchase price of your home. The lender's policy covers the amount of the mortgage.
If the title company does a thorough records search, why do I need the insurance?
There's always the possibility that the title searcher missed something. But there's also the possibility that there were defects or discrepancies the title searcher could not have found such as forged signatures or misfiled liens or judgments.
Does the amount of coverage increase as the value of my property increases?
There may be a cost of living adjustment in your basic policy, but that does not typically keep pace with increases in the market value of your property. You may want to purchase an inflation rider that will increase the coverage amount as the value of your property increases.
What other options are available on title insurance policies?
The most commonly requested option in a homeowner's title policy is a survey endorsement. Essentially, this endorsement states that the policy covers the property as described in the survey and excludes only those exceptions noted in the survey, e.g., a fence that extends beyond the property line, a garage that was built too close to the property line, etc.
How much does title insurance cost?
In many states, including New York and New Jersey, the premium rates are set by the state. That means the premium, or cost of coverage, is the same regardless of which insurance company you choose. Depending on the age of the current policy and other factors, you may be eligible for a reissue rate, and that can mean significant rate reductions. You should ask the title officer about it.
In addition to title insurance premiums, there are often local fees for recording documents.
Who pays for title insurance?
Most often the home buyer pays for both the owner's policy and the lender's policy. The premium is included as part of the closing costs. In many states (NJ, for example) the cost for a loan policy is a nominal fee added to the owner's policy premium.
