Title insurance protects the insured from claims regarding ownership of the property, liens against the property, and marketability of title to the property. The Rounsavall Title Group, in its capacity as an agent of Stewart Title Guaranty Company, offers two types of policies: the mortgagee policy which protects the lender, and the owner’s policy which protects the buyer.
According to the mortgagee policy, when a claim results in a total loss of title, the title insurance company shall take all steps necessary to defend the claim on behalf of the insured entity. In other words, the lender could ultimately be compensated for any loss they might suffer as a result of a title claim, for a claim could negatively impact their collateral interest in the property. Almost every lender today requires that you purchase this policy on their behalf at the closing of the loan. Keep in mind that this lender’s policy only protects the lender, and does not afford any protection to the home owner. So in the event of a claim, an uninsured home owner would still be responsible for repaying the debt to the lender despite the fact that they may no longer actually own the property. Furthermore, the uninsured home owner could lose any and all of the equity they have established in their home.
As such, we strongly recommend that every home owner obtain an owner’s title insurance policy in order to be fully protected in the event of a claim. It insures against the loss they may suffer, and typically includes reimbursement to the home owner for court costs and fees associated with the claim. Unlike other insurance policies you might get, this is a one time premium, and once purchased, is effective for the rest of the home owner’s life.