In my opinion, the biggest reason to purchase title insurance is for protection from real estate fraud which can occur when a fraud artist or, in some cases, a friend or family member places a mortgage against your home or property without your knowledge or consent.
Identity theft is another good reason to protect yourself. This can occur when someone sells your home or property without your knowledge or consent. Title insurance will protect you from the fallout of a fraudulent sale of your property.
Another reason to have title insurance is that it helps guard against unpaid utility bills or other liens against the property that the previous owner did not clear nor disclose prior to selling the property. This happened to my daughter when she purchased her home. In most jurisdictions, water providers are the only utility companies that can register a lien on a property for unpaid bills. This is usually as a tax lien and is typically added to your property taxes. This is the reason that water bills usually remain in the owner’s name even if the property is rented.
You are most at risk and should highly consider having title insurance if you have no mortgage on your home.
Most lawyers and lenders will insist on insurance policies when buying homes in our area.
When is the policy effective?
The policy becomes effective on the date you first purchased your property. However, it is not transferable from property to property. You would need to purchase a new policy if you sell your home. Coverage is also extended to heirs who receive a home in the event of death.
What if I need to make a claim?
Should you need to make a claim, there is no deductible. All you need is to provide evidence in writing that you have suffered a loss as a result of a defect covered by the policy. If this happens, I recommend you speak to your lawyer and they will guide you.