Types Title Insurance

Lender’s Policy

The lender’s policy (often called a loan policy) is required by most lending institutions as a way to insure their security interest in the property from defects in title. This policy protects the bank or other lending institution for as long as they maintain an interest in the property (typically until your mortgage is paid off) and is in the amount of the loan provided by the lender. The lender’s policy will pay valid claims and legal fees to defend against hidden title issues. It also helps to decrease ownership risks by providing a thorough title search prior to the issuance of either policy.

The lender’s policy does not protect the owner of the property against loss of equity resulting from a defect in title.

Owner’s Policy

The owner’s policy which will protect your rights as the homeowner from defects in title for as long as you or your heirs have an interest in the property. There are two levels of owner’s title insurance: Residential Owner’s Policy (the “standard” policy) and the Homeowners Policy (the “enhanced” policy). The differences between the coverages of the two policies are set forth below.

Protection from financial loss due to:ALTA Standard Owner’s Policy (2006)ALTA Homeowner’s Policy
Ownership Title: another party claiming an ownership in your home XX
Fraud & Forgery: another party having rights in your property arising from forgery or false impersonationXX
Undisclosed Heirs: an unknown heir claims an ownership interest in your homeXX
Liens: a creditor of the previous owner attempting to enforce a lienXX
Access: discovering you do not have actual physical access to your homeX
Encroachment: (your structures on neighbor’s property) your neighbor forces you to remove an existing structure(s), which encroaches onto neighbor’s land (boundary walls or fences are subject to a deductible) *X
Encroachment: (neighbor’s existing structures encroaching on your property) your property becomes unmarketable because someone refuses to perform a contract to purchase, lease it, or make a mortgage loan due to your neighbor’s structure encroaching on your landX
Encroachment: (neighbor creating encroachments after closing) if your neighbor builds any structures after the Policy Date, other than boundary walls and fences, which encroach on your landX
Encroachment: (your structures encroaching an easement) if you are forced to remove a structure which encroaches onto an easement or over a building set-back lineX
Surface Extraction: loss from damage to existing improvements due to the future right to use the surface of the land for the extraction or development of minerals or waterX
Supplemental Taxes: supplemental or “roll back” taxes for a period before the policy dateX