Title Tip: What is Title Insurance And What Does it Cover?

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By Lydia Blair
Special Contributor

There are lots of kinds of insurance. There’s homeowner insurance, auto insurance, health insurance, life insurance, liability insurance … You can insure just about anything of value.

“We focus mostly on property and casualty insurance,” says insurance agent Amanda Campbell of Smith Allen Insurance. But she and other insurance companies offer all kinds of insurance. “You can insurance your pet for loss, accidents, medical bills, and more.”

“You can also get wedding insurance,” she adds. “It covers loss of deposits or money lost on wedding expenses if you have to move your date due to weather or the venue ends up flooding or something. It can even cover if you serve alcohol and someone leaves and has an accident.”

And speaking of alcohol — “You could insure your really nice wine collection if all the bottles were to break or were ruined.” She says. “You can even insure body parts. That’s more for famous people.” Apparently, J. Lo has her butt insured to protect her ‘assets.’

Regardless of what you want to insure or protect, almost all insurance is purchased annually. You typically pay for it annually or monthly and you must continue to pay the premiums in order to continue to receive coverage.

That’s where title insurance and other types of insurance differ dramatically. When you purchase a property and get title insurance, you pay the premium up front at closing and it stays in effect for as long as you own your home.

Lots of new homeowners get confused between their title insurance, homeowner’s insurance and home warranty. Homeowners insurance protects against loss or damage to your home and contents. It covers things like fire, flood, theft. A home warranty is a service contract that covers repair of most major home appliances and systems. They typically cover items like air conditioning, water heaters, and plumbing.

Title insurance protects your ownership in your property. It insures the owner against someone else trying to lay claim to it.

Most insurance protects against what could happen in the future. Title insurance protects against what could have happened in the past. Homeowners – and their mortgage companies – want to be covered against losses from ownership issues that existed before they bought the property. No one wants a previously an unknown heir, ex-spouse, lien-holder … showing up to claim ownership.

Before a title company issues title insurance, they conduct research for outstanding liens, encumbrances or other title defects. Like other types of insurance, title insurance gives the owner protection against what could be catastrophic loss. Because life can be like a box of chocolates — you never know what might happen.

The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.

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