Title Insurance vs. Homeowners Insurance: What Each One Actually Covers

Two different kinds of risk

Homeowners insurance protects against things that might happen to the property after you own it — fire, wind, theft, liability. Title insurance protects against problems with the ownership itself that already existed before you bought: an old unreleased lien, a forged signature somewhere in the chain of title, a recording error, an heir nobody knew about.

Put simply: homeowners insurance looks forward, title insurance looks backward.

One premium, not an annual bill

Unlike homeowners insurance, an owner’s title policy is purchased once, at closing, and generally protects the owner for as long as they (and often their heirs) hold an interest in the property. Florida title-insurance premiums are calculated from rates promulgated by state regulation, based on the purchase price or loan amount.

Owner’s policy vs. lender’s policy

There are two types of policies. A loan (lender’s) policy protects the lender’s interest in the property as security for the outstanding loan balance. An owner’s policy protects the buyer’s investment or equity in the property up to the face amount of the policy. In many Florida transactions a lender requires its own policy, and the owner’s policy is issued simultaneously at a reduced rate.

Questions before your closing?

The firm serves as title-insurance agent and handles residential and commercial closings throughout Central Florida. If you have questions about coverage in your transaction, contact the office.