What is owner's title insurance?

Short answer

Owner's protects you if someone later claims an interest in the home from before you bought it. The CFPB says most lenders require a lender's policy for the loan amount; an owner's policy is optional coverage for your equity. You can usually shop the title company.

Full explanation

When you buy, you typically receive a deed showing that the seller transferred title to you. Owner's title insurance can respond if someone later sues claiming a pre-purchase interest—for example, unpaid taxes from a prior owner or a contractor who says they were not paid for earlier work.

Most lenders require a lender's title policy that protects only the loan. An owner's policy is a separate product that can protect your financial investment. You can usually choose the title insurer independently of the mortgage. Using the same company for both policies often costs less than buying them from two companies.

Depending on the state, the itemized title charge you see at closing can differ from the Loan Estimate or Closing Disclosure. The CFPB says that difference does not automatically mean the charge is wrong.

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