What Does Title Insurance Cover? Unpacking the Basics for Homebuyers

If you’re buying a home, you might be wondering: what does title insurance cover and do you really need it?

Becoming a homeowner is both a proud milestone and a major financial step. Between the thrill of finding your dream home and the complexity of closing paperwork, it’s easy to overlook title insurance. But this one-time purchase plays a crucial role in protecting your ownership rights and your peace of mind. So, what does title insurance cover? Let’s take a closer look at how it works, what it protects against, and why it’s a smart investment for any homebuyer.

What is title insurance?

Title insurance is a form of protection that shields homeowners from financial loss due to problems with the legal ownership of a property. While a title search is conducted during the homebuying process to uncover any issues, there may be hidden risks that can arise later. That’s where title insurance comes in. It covers past issues tied to the property’s history—things that could affect your legal right to own or use your home.

What does title insurance cover?

Even the most thorough title search can’t catch every potential problem. Title insurance acts as a safety net, covering a wide range of hidden risks and title defects. Here are eight common scenarios:

1. Errors or Omissions in Public Records

Clerical mistakes happen more often than you might think. A misspelled name, incorrect legal description, or improperly recorded document can all create legal confusion around your ownership. Title insurance steps in to fix or defend against these errors, saving you time, money, and stress.

2. Unknown Liens

If a previous owner failed to pay property taxes, contractor bills, or HOA fees, those debts may still be tied to the property even after you’ve bought it. Title insurance protects you from being held financially responsible for outstanding liens that weren’t uncovered during the title search.

3. Fraud and Forgery

Unfortunately, real estate fraud is more common than most people realize. A forged signature on a deed, an impersonated seller, or a falsified document can compromise your legal ownership. Title insurance helps cover legal costs and financial losses related to fraudulent claims, keeping your property investment secure.

4. Undisclosed or Missing Heirs

When a property owner dies, their estate may be passed to heirs. But what happens if one of those heirs wasn’t known or located at the time of sale? If they come forward later claiming a legal right to the home, title insurance protects you from the fallout, including legal defense and potential compensation.

5. Illegal Deeds or Improper Transfers

Sometimes, previous transactions involve parties who didn’t have the legal right to transfer the property, such as minors or people of unsound mind. These cases can invalidate your title, even years later. Title insurance covers the legal costs of resolving these disputes and defends your ownership.

6. Boundary Disputes

You might think your property lines are clearly defined, but survey errors or overlapping property descriptions can lead to boundary disputes with neighbors. Title insurance helps resolve these conflicts by covering legal costs and, in some cases, losses related to lost land use.

7. Easements and Right-of-Way Issues

An easement gives someone else the right to use part of your property—for example, utility companies or neighboring properties with shared access. They aren’t always recorded clearly or disclosed in the sale. Title insurance covers unknown easements that could affect your use or enjoyment of the property.

8. Title Defects from Previous Owners

If a previous owner skipped important steps, such as finalizing a divorce decree or getting all required signatures, their actions may not have legally transferred the property. Title insurance protects against these kinds of ownership gaps or improperly recorded changes in the property’s chain of title.

Even if you’ve done everything right during the buying process, issues from the past can unexpectedly resurface. Title insurance provides legal protection, financial coverage, and peace of mind. As such, it’s one of the smartest, most affordable ways to safeguard your ownership.

At Certified Title, we know that questions like, “What does title insurance cover?” are common during the homebuying process. That’s why we offer clear answers and reliable support every step of the way. Want to feel confident at closing? Contact us today to learn more or get started.

About Certified Title Corporation: Since 1994, attorney-owned Certified Title Corporation has been furnishing residential and commercial real estate stakeholders across the nation with robust title insurance, settlement, and escrow services. Renowned for its industry-leading reliability and exemplary level of service and quality, the Maryland-based company helps clients from all walks of life achieve their asset goals. To learn more, call (888)486-5511 or visit https://www.certifiedtitlecorp.com/.