Why Everyone Needs Title Insurance
Why Title Insurance Matters: What Every Homebuyer Should Know
When you're buying or refinancing a home, title insurance might not be the first thing on your mind—but it should be. Every year, the title insurance industry pays out over $600 million in claims, protecting buyers and lenders from legal and financial headaches tied to property ownership.
At Hywater Title, we believe that peace of mind during your real estate transaction is priceless. Here’s what you need to know about title insurance—and why it’s one of the smartest investments you can make in your property.
Title Issues Happen More Often Than You Think
According to the American Land Title Association (ALTA), 1 in 4 real estate transactions uncover a title issue during the closing process. That could be an unknown lien, an error in public records, or a dispute over property boundaries.
The good news? Title insurance helps resolve these problems before you take ownership—or protects you if something surfaces later.
How Much Does Title Insurance Cost?
Title insurance is a one-time premium, typically 0.5% to 1% of the property’s purchase price. That premium covers:
Title searches and examinations
The cost of clearing defects
Financial coverage for undiscovered issues—including legal defense fees
Think of it as a small price for lifelong protection.
Two Types of Title Insurance: What’s the Difference?
There are two main types of title insurance:
Lender’s Title Insurance (Loan Policy)
Required by most lenders
Protects the lender’s interest up to the loan amount
Coverage decreases as the loan is paid down
Ends once the loan is paid off
Owner’s Title Insurance
Optional, but highly recommended
Protects you, the buyer
Coverage lasts as long as you or your heirs have an interest in the property—even after it’s sold
Pays for legal fees and valid claims if issues arise
Only Owner’s Title Insurance provides full protection for your personal investment.
What Does Title Insurance Protect You From?
Before issuing a policy, title companies like Hywater Title perform in-depth public record searches—sometimes tracing ownership back 50 years or more.
Even with this thorough process, hidden hazards can still emerge after closing, such as:
Forged signatures on deeds
Errors in public records
Unknown heirs
Fraudulent transfers
Undisclosed liens
When this happens, owner’s title insurance protects your rights, covers legal costs, and pays any valid claims.
What If I’m Buying a New Construction Home?
Even newly built homes can come with title risks. For example:
The land may have had previous owners or unresolved liens
Subcontractors or suppliers may file mechanics' liens if they weren’t paid
Boundaries might be disputed without a proper survey
Title insurance ensures that both the lender and buyer are protected from claims that can arise—even with new construction.
Real Title Problems: True Stories from the Field
To show you how real and unexpected title issues can be, here are just a few examples:
⚖️ Fraud & Forgery
In one case, an out-of-town owner’s property was sold by a fraudster using forged documents. The buyer had no idea—until the real owners showed up. Thanks to their Owner’s Title Policy, the buyer was protected and received a financial settlement.
📜 Conflicting Wills
A home was sold by someone who thought they had full ownership, only to have a sibling of the seller claim a share, citing an old will dispute. The buyer’s title insurance covered legal fees and the final payout.
👤 Missing Heirs
A couple bought a home from a widow and her daughter. After the sale, a previously unknown heir appeared, claiming part of the estate. The buyer’s title insurance protected them from what could have been a costly ordeal.
The Bottom Line
Whether you’re buying, refinancing, or building a new home, title insurance protects your most valuable investment from legal claims and hidden risks that can arise long after closing.
At Hywater Title, we make sure every transaction is backed by experience, diligence, and comprehensive protection. Let us help you close with confidence.
