Owner's vs. lender's title insurance

Most closings with a loan involve two title insurance policies. They look alike on paper, but they protect different people.

The lender’s policy

A lender’s policy protects only the lender, up to the amount of the loan. If a title problem from before the sale comes up, it protects the lender’s interest in the property. Most lenders require one as a condition of the loan.

The owner’s policy

An owner’s policy protects you, for your own stake in the property, if someone later claims a right to it that began before you bought. It’s optional. You pay for it once, at closing, and there are no renewal premiums.

Why the lender’s policy doesn’t cover you

This is the part that surprises people. You’re the one living in or using the property, but the lender’s policy protects only the lender. If a covered problem comes up and you don’t have an owner’s policy, the lender’s interest is protected and yours isn’t.

What an owner’s policy covers

It covers title problems that existed before you bought but weren’t found or disclosed, such as:

• A forged signature in an earlier sale
• An heir nobody knew about
• A lien or back taxes that weren’t disclosed

See more examples in what is title insurance?

Buying both

Buying both policies together usually costs less than buying them separately. Who pays for each policy is something the buyer and seller work out in the contract. Ask your agent or attorney how your contract handles it.

Paying cash?

With no loan, there’s no lender’s policy. The owner’s policy is the only protection for your title. See cash closings.

Next step

Questions about your policy? Contact us or call either office.

This is general information, not legal advice. Talk to your attorney.