Purchasing an Owner's Policy

You might not know this, but the title insurance lender’s policy your bank requires you to buy before funding the mortgage isn’t the same thing as the optional title insurance owner’s policy your real estate agent is recommending you buy to protect your investment.

With so many mandatory fees and additional charges required to close on a home, you may be tempted to pass on other optional closing costs, like an owner’s policy. However, before you turn down this option, the title processors at Riverside Abstract, a title insurance company, stress how important it is to know that the lender’s policy only protects the lender. That means that without an owner’s policy, your financial investment in your home is at risk. Riverside Abstract’s real estate attorneys with experience in homeowner's insurance can explain the difference between an owner's policy and a lender’s policy, ultimately helping you make the right decisions.

An owner’s insurance policy may offer certain benefits that a loan policy does not. Namely, as we learn from Riverside Abstract, an owner's policy provides assurance that your title insurance company will stand behind you, both financially and legally, in case a covered title problem arises once you purchase your home. That means the owner's policy will protect you, should the title passed to you is in any way invalid, encumbered with a prior debt or lien, or should there be issues that affect the value of the land.

Title problems may be rare, but never the less they are a serious problem that can arise during homeownership. As Riverside Abstract title processors explain, complex title issues can emerge for the buyer of any property, whether it’s brand new construction or a historic home. So, if it seems too much paying a separate owner’s policy at an average cost of several hundred dollars, just remember the cost of not doing so could be much more significant, even resulting in the loss of your home. That’s because when title problems do come up, they tend to be pretty complicated.

As a result of that, Riverside Abstract highly recommends protecting your property and investment with an owner’s policy. No one wants to pay for an optional expense they don’t need, but when it comes to protecting your investment in your home, it’s best to avoid the unnecessary risk of not buying title insurance. Best of all, an owner’s policy stays with you for the entire time you own your home, and it increases as the property value appreciates. No matter how many times you refinance, your owner’s policy will remain in effect, protecting you from old claims years after you settle into your new home. Although you may never need it, the peace of mind and financial savings are monumental if you need it someday.