The largest single investment you will ever make in your life is usually your home. When purchasing a home, you will have to provide several types of insurance to protect your home or property. There are basically three types of insurance that is purchased on a property (1) Homeowners insurance, (2) Flood insurance, and (3) Title insurance. This article will only talk about the third type of insurance mentioned.
In recent years some loan companies have required title insurance, and real estate attorneys are advising their clients to purchase this type of insurance. In this article, you will get an explanation of what title insurance is. Why your lender or loan company may require you to purchase title insurance. We will also provide some advantages, as well as other information that may help you to understand title insurance.
When you purchase a property in Canada, there are searches and a survey completed to insure that the title to the property is clean and has no outstanding debts against the property that were not disclosed. In other words making sure that there are no conflicting ownership issues. It also covers permit violations, fences, boundaries, etc.
What is title insurance?
Title insurance is a one-time payment, which offers financial protection for the homeowner. This insurance is a comprehensive insurance coverage policy that is directly linked to a property title. This insurance covers the risks associated with home buying hazards or defects such as unpaid liens, incorrect notary acknowledgements, mistakes in public records, and so forth.
Lender or Mortgage Protection and Owner’s coverage are the two basic types of title insurance. The most important aspect of title insurance is the emphasis on risk elimination, which gives the policyholder the best chance of avoiding title claim losses.
Why would you want it?
Owners or buyers would want title insurance because it lasts as long as you or your family owns the property and insures that there are no hidden title hazards that can threaten you financially while owning the home or property.
This type of insurance will also protect you from having to fight if there is a claim against the property. Once insured, the property insurer will then help to fight against the claim.
Why are loan companies requiring this insurance?
When a lender requires insurance is it generally for the length of the loan, and can be transferred or carried for additional time. This type of insurance can be valuable and is very effective when used properly. Lenders or loan companies are requiring title insurance because it is a security for their investment in making the loan to purchase the property.
There are advantages to having title insurance, and one of the biggest advantages comes with the purchase of older homes, if the purchaser takes out title insurance they are then covered for any loss or damage sustained if a claim arises. There are many questions that can be asked to make sure that you are getting the most comprehensive policy available to you.