What is title insurance and do I need it?
Think title insurance is optional? One title claim can cost you everything — here’s how to avoid that risk.
What is title insurance?
Title insurance protects you against hidden problems with a property’s title. A title defect can be an unpaid tax, a forged signature, an undisclosed heir, or an error in public records. Unlike a title search that looks backward for visible issues, title insurance protects you forward — it pays legal fees and losses if a covered title problem shows up after closing.
Buyer vs. lender coverage: know the difference
- Lender’s title insurance protects the mortgage lender, not you. It covers the bank’s interest until the loan is paid.
- Owner’s title insurance covers you, the homeowner. It protects your equity, legal costs, and can defend your ownership in court.
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Do I need title insurance?
Short answer: Yes, if you value your money and want real protection.
Long answer: If you are buying a property, you already rely on a title search. Title searches often find obvious problems. They miss hidden issues like forged documents, clerical errors, undisclosed heirs, or fraud. One claim can erase years of equity. Owner’s title insurance is a one-time premium at closing that can save tens or hundreds of thousands later.
When to consider owner’s title insurance:
- You’re buying an older home where records are messy.
- The chain of ownership looks incomplete.
- The property had probate, divorce, or multiple prior owners.
- You’re buying in a market with high fraud or clerical errors.
Real-world example
A buyer in Toronto closed on a century-old house. Public records missed a 1950s deed error. Years later, an unknown heir surfaced and challenged the title. Legal defense cost over $60,000. Owner’s title insurance would have handled the legal fees and protected the homeowner’s equity.
How much does title insurance cost?
It’s a one-time fee at closing. Cost varies by province and purchase price. Compared to mortgage interest and closing costs, the premium is small. The payout for a valid claim can be massive compared to the premium.
How to buy title insurance
- Ask your Realtor for a quote — not all lenders automatically include it.
- Compare owner’s vs lender’s policies — get owner’s coverage if you want to protect equity.
- Read the policy exclusions and coverage limits.
- Keep your policy — it can protect you for as long as you own the home.
Actionable takeaway
If you’re closing a purchase: budget for owner’s title insurance. It’s a small, one-time cost that transfers huge risk off your balance sheet.
Ready to protect your next purchase?
Work with a trusted local Realtor who understands title risk in your market. For a quick assessment and a title insurance quote, contact Tony Sousa: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
Title insurance is not a guess. It’s insurance against headline-level problems. Pay a small premium once, and sleep easy for years.
