A title insurance policy protects a real estate owner or lender against any loss or damage they might experience because of liens, encumbrances, or defects in the title to said property or the incorrectness of the related search. The terms of the title insurance policy specify the risks that are covered or excluded.
The following Title Insurance FAQs and Information explain what a title insurance policy is and how it benefits homeowners.

What is the Difference Between Title Insurance and Casualty Insurance?

Casualty Insurance (e.g., car, life, or health insurance) assumes the risk for future events, collecting monthly or annual premiums. Meanwhile, a Title Insurance policy insures the past of the real property and the people who owned it for a one-time premium paid at the close of escrow.

How Does Title Insurance Protect Your Ownership of Real Estate?

Real estate has always been considered man's most valuable possession. It is so basic a form of wealth that many special laws have been enacted to protect ownership of land and the buildings that stand on the land. You should realize whenever you buy a property that the owner who is selling it to you has extremely strong rights, as do his family and heirs. Also, there may be others, in addition to the owner, who have "rights" with regard to the property you are going to buy, such as governmental bodies or contractors.

Some of the things a title search can uncover are any unpaid taxes or mortgage judgments against previous owners, easements, and many other court actions or recorded documents that can affect title to real estate. Title Companies find and report such defects in the title to the real estate you wish to buy so that these matters can be corrected and cleared up. This is the first part of the two-fold benefit homeowners receive when title insurance is ordered.

What Else Does Title Insurance Protect You Against?

Title Insurance protects you against hidden risks. Protection against loss from claims on real estate that cannot be discovered by examination of the public records is the second part of the two-fold benefit provided by Title Companies.

How Does a Title Insurance Policy Protect Against Hidden Risks?

If a claim is made against your title as covered by your policy, Title Companies protect you by:

1. Defending your title in court, if necessary, at the Title Company's expense.
2. Bearing the cost of settling the claim if it proves to be valid in order to perfect your title and keep you in possession of your property.

Who Needs Title Insurance?

Purchasers and lenders need title insurance to know the property they are involved with is insured against various possible title defects. Whether the transaction is a sale, refinance, or construction loan, the seller, buyer, and lender all benefit from Title Insurance.

What Types Of Policies Are Available?

A standard CLTA (California Land Title Association) "Owner's" policy insures the new owner and home buyer, while an ALTA (American Land Title Association) or CLTA "Lenders" policy insures the priority of the lender's security interest. An extended coverage ALTA-R (Residential) policy to owners of 1-4 unit property is also offered. The ALTA Homeowner's policy is for owners of 1-4 unit properties, as well, and expands the number of covered title risks to 29, including certain specified risks that may arise in the future. Some Title Companies may issue this extended coverage automatically on qualifying properties. Special Binders, Guarantees, and Endorsements are also available.

How Is A Title Policy Created?

After the escrow officer or lender opens the title order, Title Companies begin a search of the public records through the County Recorder, Federal and State Agencies, and County and City Offices. A Preliminary Report is issued to the customer for review and approval. All closing documents are recorded upon the escrow's instruction. After confirmation of recording, demands are paid, funds are disbursed, and the actual title policy is typed and sent to the insured.

How Often Do You Pay Into Title Insurance?

You will only pay once. Unlike other forms of insurance, with Title Insurance, the original premium is your only cost as long as you own the property. There are no annual payments to keep your Owner's Title Insurance Policy in force.

The enclosed information is deemed reliable but is not guaranteed.