Title insurance is an insurance policy issued at the closing of Florida real estate. It is a product that protects owners and/or lenders from future monetary losses due to prior title risks.
There are two types of title insurance policies: an owner’s policy and a lender’s policy. An owner’s policy is issued for the purchase price of the property and insures the owner’s title so long as the owner remains the owner of the real estate. It is a one-time fee based upon the purchase price of the property. The lender’s policy insures the lender up to the loan amount against matters which could invalidate the mortgage or would have lien priority over the mortgage.
If a claim is made against the owner, the title insurer will defend the owner’s interest in any court case which may arise, and if the claim is valid, either pay the claim up to the amount of the policy or incur the costs to resolve the claim and clear title. The cost of litigation will likely far exceed the cost of the title premium. A lender is protected in a similar way, up to the outstanding principal balance of the insured mortgage.