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DOES YOUR CUSTOMER REALLY NEED TITLE INSURANCE? |
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Submitted by the Tennessee Land Title Association As a professional dealing with home purchasers and borrowers, you may have been asked some of the following questions: What exactly does title insurance cover, and who does it protect – the homeowner or the lender? Do you need title insurance on a refinance if you bought title insurance when you purchased your home, or refinanced six months ago? Here are answers to those important questions, as well as helpful advice on title insurance and why it is needed.
Title insurance seems like just one more expense I have to pay when I buy or refinance a home. What exactly does it cover?
Title insurance protects against problems affecting the title to your home, possibly your most valuable asset. There are two types of title insurance – a lender’s policy, and an owner’s policy. When you obtain a loan, (and a refinance is a new loan), the lender usually will require that you purchase a lender’s title policy to protect their investment in the property. Owner’s title insurance is optional, but it protects the homeowner by paying claims and legal fees should a problem arise. You usually only purchase an owner’s policy at the original sale, not on a refinance. Although an owner’s policy is not required, the State of Tennessee Department of Insurance requires the purchaser to sign a waiver should you decide not to purchase an owner’s policy.
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