Homeowners Insurance Resource Center
Title insurance protects the owner of property and the mortgage lender against future claims for any unknown defects in the title to the property at the time of sale. Claims can arise as a result of fraud, forgery, unpaid real property taxes, judgments, liens, or other encumbrances that were not discovered during a search of the property’s title history conducted before the sale. A title search is a detailed examination of historical public records including deeds, court records, property and name indexes and other public documents.
Things to Know
There are two types of title insurance policies: lender’s (mortgage loan) policies, and owner’s (fee or purchase) policies. The homebuyer is generally responsible for paying for both policies.
Lender’s Policy- Protects the lender’s interest in the property. The amount of insurance coverage is usually the loan amount, and the amount of coverage declines as the loan amount is reduced by mortgage payments.
Owner’s policy- Protects the property owner up to the full original sales price of the property. Unlike mortgage policies, an owner’s policy’s amount of coverage does not decline over time. An optional market value endorsement can be purchased with the owner’s policy to keep pace with increases in a property’s value over time. In the event of a claim, the full market value of the property would be recoverable. (An owners Policy could also apply to Leasehold Policies and Construction Loan Policies.)
Title insurance rates and rules are subject to approval by the Department. Title insurers are licensed by this Department. A list of title insurers licensed in New York and links to their web sites can be found at Title Insurers. Some of the websites include rate calculators to assist in determining the premium for the various types of policies.
Title Insurance Rate Service Association (TIRSA) is a rate service organization licensed by the Department. TIRSA proposes rates and rating rules, forms and endorsements on behalf of its member title insurance companies. Though TIRSA files proposed rates and rules on behalf of all its members, each insurer may file for approval of its own rates and rules manual independently. TIRSA’s rate manual, which includes the rates and rules and descriptions of various types of policies and endorsements issued by its member insurers, is available on line at http://www.tirsa.org.
Title insurance premiums are lower in the following situations.
Simultaneous Mortgage Issue- When Owners and Mortgage policies are issued at the same closing, a reduced rate known as the Simultaneous Mortgage Rate applies. The Owners policy is charged the full Owners rate and the Mortgage Loan policy is charged 30% of the applicable Mortgage Loan rate.
Refinance/Subordinate Mortgage- A discounted premium is applicable for a Mortgage Loan policy issued at the time of a refinancing, when issued within ten years of a previously insured mortgage or fee policy, and there has been no change in ownership and the property has not changed.