What Is A Title Insurance Policy?
Title Insurance Policies - BBC Title MI

Title Insurance Policies: What they are and why you need them when buying or selling real estate.

A title insurance policy is a policy of indemnity. The policy says that the insurer will indemnify the insured against loss if title to the property turns out to be anything other than what was shown in the policy and subject to the limitations by the terms of the policy and the exceptions set forth in Schedule B (exceptions to coverage).

Other forms of insurance cover matters that occur subsequent to (after) the date of the policy. The standard title insurance policy does not insure against loss for matters that occur after the policy date (except in certain instances, such as construction lien coverage).

Losses could be caused by matters “not of record”, like an unknown heir or by Schedule B (exceptions to coverage) not showing all of the matters that affect the title to the property. However, there are specialized products available today that will insure matters after the policy date (i.e. the ALTA Homeowner's Policy that offers “expanded coverage” for example).

The cost for expanded coverage is approximately 25% more than standard policy coverage and the potential claims for this specialized coverage are also subject to policy exceptions and limitations, and in some cases, even an insurance deductible.

An owner's policy of title insurance has four (4) insuring clauses, a loan policy has eight (8) . The insuring clauses are broad in scope and customers should be advised that, just like all forms of insurance coverage, the policy has exclusions from coverage, conditions and stipulations that narrow the specific coverage provided by the insuring clauses contained in the policy. Schedule B shows exceptions to title that will not be covered.

If a customer wants explanations about items covered or specifically not covered, they should enlist the counsel of their real estate attorney or contact the title insurance underwriter directly for more detailed information.

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