How to decide whether to buy owner's title insurance
Owner's title insurance is optional, but it is the only title policy that protects you rather than your lender. It covers ownership claims that existed before you bought. You pay once at closing, commonly about 0.5% to 1% of the price, and coverage generally lasts as long as you own the home.
Lender's vs owner's title insurance: what each covers
Most insurance protects you from things that happen next. Title insurance works the other way. It covers problems with ownership that already existed on the day you bought but weren't found, such as a lien that was never released, an error in the public record or a break in the chain of past owners.
Two policies can appear on your closing paperwork. The lender's policy is typically required and protects the loan amount. The owner's policy is the one you may choose to add, and it protects your own stake. If you pay cash, there is no lender's policy at all, so the owner's policy would be your only title coverage.
When to decide on title insurance at closing
Settle this after you get your Loan Estimate and before you sign. Your Closing Disclosure must reach you three business days before closing, which gives you a last chance to confirm the line is there and the price makes sense. Buying alongside the lender's policy is the normal route. If you are thinking of adding it after closing, ask the title company first whether that's possible and what it would cost.
Owner's title insurance cost by home price
One title industry guide puts premiums at about 0.5% to 1% of the purchase price. Your quote may land elsewhere, since the price depends on your state, the home's price and the insurer. There are no renewals. The figures below apply that range to three sample prices.
| Purchase price | At 0.5% | At 1% |
|---|---|---|
| $250,000 | $1,250 | $2,500 |
| $400,000 | $2,000 | $4,000 |
| $600,000 | $3,000 | $6,000 |
The CFPB says the combined cost is usually lower when one provider writes both policies. On your taxes, the IRS treats owner's title insurance as a cost you add to your home's basis. You can't deduct it as an expense, so keep the receipt with your closing papers.
Is owner's title insurance worth it? How to decide
- Find the line on your paperwork
Look for the owner's title policy on your Loan Estimate and Closing Disclosure. It is often marked optional.
- Get a quote in writing
Ask for the owner's premium alone and the combined price with the lender's policy, plus any discount for buying both together.
- Compare providers if your state allows it
Get at least one more quote in states where rates can differ. Compare other title fees too, not only the premium.
- Ask who pays
Check your purchase contract and ask your agent about local custom. A seller may cover this, or you may be able to negotiate it.
- Read the exceptions
Ask the title company to walk you through each item the policy would leave out. Call an attorney about anything you don't understand.
- Save the final policy
When it arrives, file it with your deed and settlement statement, since you would need it to make a claim.
How owner's title insurance pricing varies by state
Pricing differs a lot. In most states insurers file their own rates, so quotes can vary and shopping can pay off. Texas, Florida and New Mexico set the premium by state rule, so comparing companies there won't change the premium itself, though other title fees can differ. Who pays also follows local custom and your contract, so ask your agent if the seller normally covers the owner's policy in your area.
What owner's title insurance leaves out
- Exceptions. Anything the title search finds is usually fixed before closing or listed as an exception, and listed items aren't covered. Read that list.
- Physical problems. Structural or environmental issues aren't title claims. They belong to inspections and other insurance.
- Anything that starts after closing. A lien created after you buy falls outside the policy.
- A surprise on closing day. Title charges can differ from your Loan Estimate. The CFPB says that doesn't automatically mean an overcharge, but you should ask why.
- Being steered. You can usually pick a title provider separately from your mortgage, so a recommended company is only a suggestion.
If the title report shows a lien, an unknown easement or a disputed boundary, stop and talk with a real estate attorney before you close.
Do I need owner's title insurance? Common questions
Is owner's title insurance required?
Usually not. Lenders typically require only the lender's policy, and the CFPB describes the owner's policy as something you may want to buy. Check your purchase contract, since a deal can set its own terms.
How long does owner's title insurance last?
It generally stays in effect as long as you or your heirs hold an ownership interest, depending on the policy wording. You pay once, with no renewals.
Can I deduct title insurance on my taxes?
No. The IRS lists title insurance among costs you can't deduct, but owner's title insurance is added to your home's basis. Ask a tax professional how that applies to you.
General guidance for U.S. homes, not professional advice. For gas, electrical and structural work, call a licensed pro.