How much does Title Insurance cost? What does it cover and why is it important?

If you're buying a home for the first time, you'll come across many costs – some of them quite confusing. A common example? Title insurance. If you're wondering what it is, how much it costs, and whether you really need it, this article will give you the answers.

What is a “Property Title” in Real Estate?

In real estate, the “title” represents the legal right of ownership over a property. When you buy a house, you don’t just acquire the building and the land, but also the legal rights related to it — the right to live there, sell, rent, or make modifications. However, these rights may be affected by various restrictions, such as easements, mortgages, or zoning regulations.

What is Title Insurance?

Title insurance is a policy that protects both the buyer and the lending institution providing a mortgage loan, against problems related to the property title — issues that could endanger ownership rights.

What Does Title Insurance Cover?

This insurance covers a variety of unforeseen situations that may arise even after the transaction is completed. Among the most common problems:

• Unknown debts or mortgages on the property.

• Errors in public records or the title deed.

• Forged documents in the property’s history.

• Unknown heirs claiming the property.

• Undeclared or incorrectly declared easements.

• Boundary disputes or measurement errors.

If such issues arise, the insurance policy can cover legal costs and, in some cases, financial losses.

Is Title Insurance Necessary if the Title Search Was Clear?

Yes. Even a thorough title search can miss hidden errors or unknown heirs. Moreover, in the context of increasing identity theft and document forgery sophistication, risks are higher. There have been cases where people sold properties they didn’t own or falsely claimed to be heirs to illegally obtain property.

What Types of Title Insurance Exist?

There are two main types:

• Lender’s Title Insurance — Usually mandatory and protects the bank or financial institution.

• Owner’s Title Insurance — Optional but recommended. The cost is low compared to the property value, but the protection offered can save tens of thousands of dollars in litigation cases.
  The owner’s policy is valid as long as you own the property.

How Much Does Title Insurance Cost?

The price varies depending on location and property value. Generally:

• Owner’s insurance: between 0.5% and 1% of the home’s price.

• Lender’s insurance: between $500 and $1,500.

For a $300,000 house, the total cost (for both policies) can reach between $2,000 and $4,500, depending on the region and insurance company.

Who Pays for Title Insurance?

It depends on local customs and can be negotiated. In some US states, such as Texas, Florida, or California, the seller pays for the owner’s policy, and the buyer pays for the lender’s policy. It’s good to talk with your real estate agent to understand what is usual in your area and if you can negotiate these costs.

Factors Influencing the Cost

• Property price — the higher it is, the higher the insurance cost.

• Location — rates differ from state to state (and even between regions within the same state).

• Insurance company — each may offer different rates or deals.

• Property type — atypical properties (e.g., lots combined from several parcels) may involve higher risks.

How Can You Save Money?

Although you can’t completely avoid title insurance, you can reduce costs by:

• Comparing offers from several companies.

• Checking if the bank has a preferred provider with better rates.

• Looking for discounts on new constructions.

• Checking reissue rates — if a recent policy exists, you might get a lower rate.

• Negotiating with the seller to cover the owner’s policy cost.

Is Title Insurance Worth It?

Yes, definitely. Legal costs to defend ownership rights can far exceed the price of a policy. Although it does not add aesthetic or functional value to your home, title insurance protects your investment and gives you peace of mind.