A frequent refrain we hear from our clients is “Why do I need title insurance when you have already done a title search?” Not only does title insurance cover mistakes made during a title search, it also covers a gamut of issues that even the best title search cannot reveal. For example, a title search cannot detect a forged document, or definitively identify a faulty legal description, or account for the indexing mistakes and tardy record-keeping at the government clerk’s office.
Title insurance claim rates are approximately 5 percent, relatively low when compared to other forms of insurance, which often invites skepticism among prospective homebuyers.
However, missing from this statistic, are the title snags we encounter that do not result in direct claims by an insured home seller. In many cases, the seller is not even aware of the behind-the-scenes curative work that has been done for the seller to convey insurable title to their buyer.
Without an owner’s title insurance policy, the legal costs to hash out a title claim would be in the tens of thousands of dollars paid directly out of your pocket. Not to mention you could lose the money you’ve invested in your property such as your down payment and any improvements you’ve made.
Personally I can attest to the fact that my closing attorney puts in a ton of overtime clearing titles in all but the cleanest of closings. This hard work usually happens without my client ever knowing, and it is just another aspect of what makes my "team" so great - I can trust my closing staff to do a great job, quickly and professionally. But there are instances when even the most diligent amount of digging does not reveal a decades-old title issue, and that is exactly what title insurance is for: to protect one of the biggest financial investments you will ever make.
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