Introduction to Title Insurance Policies:
Owner’s Policy
An owner’s policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. You should protect the equity in your new home with a title policy.
Protection from financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy.
Payment of legal costs if the title insurer has to defend your title against a covered claim.
Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy.
Lender’s Policy
A lender’s policy, also known as a loan policy or a mortgage policy, protects the lender against loss due to unknown title defects. It also protects the lender’s interest from certain matters which may exist, but may not be known at the time of the sale.
This policy only protects the lender’s interest. It does not protect the purchaser. That is why a real estate purchaser needs an owner’s policy.
Detailed Exploration of Policies:
What are the Policy Types?
A standard policy insures the new owner/home buyer, and a lender’s policy insures the priority of the lender’s security interest. There are two basic kinds of title insurance:
- Lender or mortgagee protection
- Owner’s coverage
Most lenders require mortgagee title insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection. When title insurance is provided, lenders are willing to make mortgage money available in distant locales where they know little about the market.
Owner’s title insurance lasts as long as you, the policyholder – or your heirs – have an interest in the insured property. This may even be after you have sold the property.
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The ALTA Homeowner Policy
There are two types of owner’s title insurance policies certified by the American Land Title Association – the Owner’s policy and the Homeowner’s policy. The Owner’s policy protects you from defects and liens in the history of your title through the date and time your deed is recorded in the public records. The Homeowner’s policy takes your protection to a higher level by providing coverage for many additional risks – including some that might occur after the deed has been recorded.
The Homeowner’s policy protects against many common, frustrating problems; and protects your investment for as long as you or your heirs own the property. Read on for a description of some of the additional coverages you’ll receive when you upgrade to a Homeowner’s policy.
More Coverage, More Peace of Mind
Building Permit Violation Coverage
Covers up to $25,000 after a deductible equal to the lesser of one percent of the policy amount, or $5,000. This coverage applies if you have to remove an existing structure (excluding boundary walls and fences) built by a previous owner who did not obtain the required permits.
Subdivision Map Act Coverage
Pays up to $10,000 after a deductible equal to the lesser of one percent of the policy amount, or $2,500. This coverage applies if you cannot close a sale, secure a loan or obtain a building permit because the land was improperly subdivided prior to purchase.
Location Coverage
Ensures that the home has the same address as the property insured in the policy.
Restrictive Covenant Violations Coverage
Protects against loss of title if someone attempts to enforce an existing restrictive covenant due to a violation that occurred before the policy date.
Zoning Coverage
Protects if you are forced to remove or remedy a structure because it violates zoning laws. Protection for forced remedy of violations is subject to a deductible and a maximum dollar amount.
Post-Policy Coverage
Protects against possible post-policy ownership claims as a result of forgery or encroachment.
Enhanced Access Coverage
Covers actual pedestrian and vehicular access to the property.
Encroachment Coverage
Protects against someone building a structure (excluding boundary walls and fences) that encroaches on the insured property.
Supplemental Taxes
Protects against supplemental taxes for construction, change of use or ownership.
Coverage for Structure Damage from Extraction of Minerals, Water and Other Substances
Protects all existing structures and landscaping (including future replacements) on the property, against damage caused by others using the land for extraction and development of minerals, water and other substances.
Automatic Coverage Increases
Each of the first five years, the policy amount will automatically increase by 10 percent in value, up to a total of 150 percent, to cover increases in the value of the insured property.
Living Trust Coverage
Extends policy protection to include a trust you create.
Trust the Homeowner’s policy backed by the company with more than 116 years of service and satisfaction. Choose Stewart, and you’ll have the peace of mind you deserve from a title company.