Arriving at the closing table is an exciting culmination to a real estate transaction. For buyers, in addition to purchasing a property, they are also acquiring home insurance, possibly a home warranty, and two types of title insurance. The first is a lender’s policy which most banks and mortgage companies will require as part of your loan. That policy protects the lender from loses in the event of title problems while you have a mortgage on the property.

Second, as a buyer, you have the option of purchasing an owner’s title insurance policy. This is important because your lender policy only covers your mortgage company, not you. In the event of fraud, property line disputes, easement appropriations, only an owner’s policy will protect your rights and offer services on your behalf. An owner’s policy addresses the homeowner’s liability and can exceed the loan amount up to the full value of the property. In evaluating which title company to purchase policies from, consider the following:

Are you getting the best price? – In some states, prices are set or capped at a specific amount. If you live in a state without any price control, you may be able to save money by shopping around. Your real estate agent and closing company will likely have recommendations. Know that you are also able to shop and chose a title insurance company on your own.

Price isn’t everything – Just as you would with care or homeowner insurance policies, you want to make sure the title policy offers the most comprehensive coverage possible. If you are price shopping, make apple-to-apple comparisons. A policy that is $100 less upfront but has a long list of exclusions in their coverage may leave you at risk for costly dispute resolution in the future.

Get the right type of policy – Your state may have different policies for a commercial property versus a residential property. This may seem intuitive, but if you are buying a house that is used as a business (common for lawyer and accountants), you need to be sure you’re buying the right policy to protect you from future title issues.

Can you add coverage? – If you make improvements to your home, the value of your property may increase beyond stated cap amounts in your policy. Some companies allow you to purchase incremental coverage to keep owner’s policy aligned with the value of your home. Also, find out if you can purchase a new title insurance policy at a discounted rate if you refinance your home.

Choose Your Title Insurance Company Wisely

In addition to carefully examining the terms of the policy, you also want to vet the title insurance company.

Will the title company meet your needs? – In this electronic age, customers expect companies to communicate quickly, have 24-hour service, and be able to interact digitally. If those are your expectations, then a title company that keeps traditional banker hours, requires documents to be faxed, and has no email communication may not be a good match for you. Research the company you are considering since they will hold your policy for as long as you own the property. It’s a long-term relationship, be sure you can live with it.

Is the title company reputable? – Beyond ease of communication, you want to make sure your title insurance company can deliver a high level of customer satisfaction. You only need to contact them when something is going wrong. It already a stressful time and not an ideal moment to find out the company is shady or just inept. Conduct your due diligence. Look for online reviews, third-party articles, or Better Business Bureau listings.
Remember, your owner’s title insurance is a long-term investment. While you only pay for it once, it stays in effect for as long as you own the property. Make time before the closing to research companies and review terms so that you choose the best coverage available to you.

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