Protecting your Home Investment
A home is usually the largest single investment most individuals will ever make. When you purchase a home, you will purchase several types of insurance coverage to protect your home and personal property. Homeowner's insurance protects against loss from fire, theft, or wind damage. Flood insurance protects against rising water. A unique coverage known as title insurance protects against hidden title hazards that may threaten your financial investment in your home.
Protecting Your Largest Single Investment
The title insurance is not as well understood as other types of home insurance, but it is equally important. When purchasing a home, instead of purchasing the actual building or land, you are actually purchasing the title to the property - the right to occupy and use the space. That title may be limited by rights and claims asserted by others, which would limit your use and enjoyment of the property, as well as potentially bring financial loss. Title insurance protects against these types of title hazards.
Other types of insurance that protect your home focus on possible future events and charge an annual premium. Contrastingly, title insurance is purchased with a one-time premium and protects against loss from hazards and defects that already exist in the title.
Two Kinds of Title Insurance Benefit you in Two Ways
There are two basic kinds of title insurance:
- Lender or mortgage protection
- Owner's coverage
Most lenders require mortgage title insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection. When title insurance is provided, lenders are more willing to make mortgage money available in distant locales where they know little about the market.
Homeowner's title insurance lasts as long as you, the policyholder, or your heirs, have an interest in the insured property. This may even continue after you have sold the property.
Depending on local practices and state law where the property is located, you may pay an additional premium for an owner's policy or you may pay a simultaneous issue charge, usually a smaller amount, for the separate lender coverage. You may even split settlement costs with the seller for the lender or owner's policy.
What does your Premium Really Pay for?
An important part of title insurance is its emphasis on risk elimination before insuring. This gives you, as the policyholder, the best possible chance for avoiding title claim and loss.
Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by the title agent or attorney on behalf of its underwriter to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all "material objections" to the title. Frequently documents that don't clearly transfer title are found in the "chain," or history, that is assembled from the records in a search. Here are some examples of documents that can present concerns:
- Deeds, wills, and trusts that contain improper wording or incorrect names
- Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes
- Easements that allow construction of a road or utility line
- Pending legal action against the property that could affect a purchaser
- Incorrect notary acknowledgments
Through the search and examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.
Hidden Title Hazards - Your Last Defense
In spite of all the expertise and dedication that go into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises. Some examples of hazards include:
- A forged signature on the deed, which would nullify a transfer or ownership to you
- An unknown heir of a previous owner who is claiming ownership of the property
- Instruments executed under an expired or a fabricated power of attorney
- Mistakes in the public records
Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims; all for a one-time premium at closing.
Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner's title insurance policy.
Enhanced Policy/Comprehensive Coverage
the ALTA (American Land Title Association) Homeowner's Policy is a collection of coverages designed to meet the concerns of our homeowner customers. Our Homeowner's Policy offers 12 extended coverages to accommodate your specific needs.
From building permit and restrictive covenant violations, to living trust and zoning coverages, the Homeowner's Policy protects against common, frustrating problems that can plague today's homeowner.
Many of the coverages and protections available through our Homeowner's Policy, such as post-policy encroachment adverse ownership, ensure Stewart will pursue corrective action or provide additional compensation. And the policy protects your investment for as long as you or your heirs own the property.
Trust the Homeowner's Policy backed by the company with more than 115 years of service and satisfaction. Stewart Title Guaranty Company is rated A+ from Fitche Ratings and A'' from Demotech, Inc.
More Coverage More Peace of Mind
Building Permit Violation Coverage - Covers up to $25,000 after a duductible equal to the lesser of one percent of the policy amount, or $5,000. This coverage applies if the policyholder has to remove an existing structure built by a previous owner who did not obtain the required permits.
Subdivision Map Act Coverage - Pays up to $10,000 after a deductible equal to the lesser of one percent of the policy amount, or $2,500. This coverage applies if the policyholder cannot close a sale, secure a loan or obtain a building permit because the land was improperly subdivided prior to purchase.
Location Coverage - Ensures that the home has the same address as the property insured in the policy.
Restrictive Covenant Violations Coverage - Protects against loss of title if someone attempts to enforce an existing restrictive covenant due to a violation that occurred before the policy date. The only exception to this coverage would be loss relating to maintenance or repair on the land or due to environmental protection issues.
Zoning Coverage - Protects if the policyholder is forced to remove or remedy an improvement because it violates zoning laws. Protection for forced remedy of violations is subject to a deductible and a maximum dollar amount.
Post-Policy Coverage - Protects against possible post-policy ownership claims which may decrease property value.
Enhanced Access Coverage - Covers actual pedestrian and vehicular access.
Encroachment Coverage - Protects against someone building a structure (excluding boundary walls and fences) that encroaches on insured property.
Supplemental Taxes - Protects against supplemental taxes for construction, change of use or ownership.
Coverage for Structure Damage from Extraction of Minerals, Water and Other Substances - Protects all structures and landscaping on property, including future improvements, against damage caused by others using the land for extraction and development of minerals, water and other substances.
Automatic Coverage Increases - Each of the first five years, the policy amount will automatically increase by 10 percent in value, up to a total of 150 percent, to cover increases in the value of the insured property.
Living Trust Coverage - Extends policy protection beyond probate to include trustees.