Two kinds of policies
Lender's policy. Protects the lender's interest in the home. Lenders require it on almost every loan, including most refinances.
Owner's policy. Protects your ownership for as long as you or your heirs own the home. It's optional but strongly recommended. You pay for it once, at closing.
What it can protect against
- Errors in public records
- Unknown liens, such as unpaid taxes or contractor bills from a prior owner
- Forged documents or fraud in the home's ownership history
- Missing heirs who later claim an interest in the property
Who pays?
It depends on local custom and your purchase contract. In some areas the seller pays for the owner's policy; in others the buyer does. Your escrow or title company will show the cost on your Loan Estimate and Closing Disclosure.
Frequently asked questions
Do I need new title insurance when I refinance?
Usually you'll need a new lender's policy. Your owner's policy from the purchase stays in place.
Is title insurance the same as a home warranty?
No. A home warranty covers repairs to systems and appliances. Title insurance covers ownership problems.
Related: Purchase · Wait... I Have to Pay Closing Costs?