Owner’s Policy
The owner’s policy assures a purchaser that the title to the property is vested in that purchaser and that it is free from all defects, liens and encumbrances except those which are listed as exceptions in the policy or are excluded from the scope of the policy’s coverage. It also covers losses and damages suffered if the title is unmarketable or for lack of ingress and egress (loss if there is no right of access to and from the land). Beyond the basic coverages, policy endorsements and expanded forms of residential owner’s policy exist that cover additional items of loss.
The liability limit of the owner’s policy is typically the amount of consideration paid for the property. As with other types of insurance, coverages can also be added or deleted through the use of endorsements. Policy endorsements provide further assurances to the insured by the title underwriter and are usually approved by the state in which the policy is issued. Premium charges for the policy vary by state and may be paid by either the seller or buyer in a real estate transaction. However, local custom strongly influences which party will pay for the owners and/or lenders title insurance policy, including endorsements and related charges. The allocation of title insurance costs are usually reflected in most local real estate contracts, which can be provided by your local real estate broker.
Consumers should inquire about the cost of title insurance, including related title service fees, prior to signing a purchase and sales agreement requiring them to pay specific title insurance related charges. A real estate attorney, broker, licensed title agent, attorney agent, escrow officer (in the western states), or loan officer are the most qualified to provide detailed information to the consumer as to the price of a title search, examination fees, insurance premium, and other related title charges before the real estate contract is signed. Title insurance coverage lasts as long as the insured retains an interest in the land insured or so long as the insured shall have liability by reason of conveyance of warranty made by the insured in any transfer or conveyance of the estate or interest. The latter is referred to a the continuation of coverage after conveyance of title to property. Usually, no additional premium is paid after the policy is issued.