Owner’s title insurance is optional, which leads some buyers to skip it to save a little at closing. That decision deserves a real look, because it is the only thing standing between you and a hidden title problem. Let me make the case plainly.
Written by Adam L. Engel, Esq., Principal and real estate attorney at Prime Title & Escrow
Because an owner’s policy is not required, it is easy to treat it as an upsell. It is not. It is the one piece of the closing that protects your own money if something in the property’s past comes back to surface. Here is why I recommend it to nearly every buyer.
The lender’s policy you pay for protects the bank, not you. An owner’s policy is the only protection for your own equity against a hidden defect such as a forged deed, an unknown heir, or a missed lien. You pay once, and it lasts as long as you or your heirs own the home. For most buyers, that is a small price for real protection.
What you are actually protecting
Picture buying a home, living in it for five years, and then learning that a deed in the chain was forged, or that an heir who never signed off has a claim. Clearing a problem like that means legal work and possibly a real financial loss. An owner’s policy is what pays to defend your title and covers that loss. Without it, the fight and the cost are yours alone. These are the very defects the Virginia State Corporation Commission describes as the reason owner’s coverage exists.
The lender’s policy will not help you
The most important thing to understand is that the policy you are already paying for does nothing for you. The lender’s policy protects the bank’s loan. If a covered defect wipes out your equity but the loan is still secure, the lender’s policy has done its job and you receive nothing. I explain the split in owner’s versus lender’s title insurance. The owner’s policy is the only one with your name on it.
Pay once, protected for as long as you own
An owner’s policy is a one time premium paid at closing. There is no renewal and no monthly cost, and the coverage stays in force for as long as you or your heirs own the property. Compared with the size of the purchase and the equity you are building, the premium is modest, which I cover in how much title insurance costs in Virginia. You may also qualify for a discount, the reissue rate, if the seller had a prior policy.
If you are paying cash, there is no lender and therefore no lender’s policy at all. That means without an owner’s policy you have no title protection of any kind, even though the hidden risks are exactly the same. Cash buyers often have the strongest reason to buy an owner’s policy, not the weakest. I make sure every cash buyer hears that clearly.
My recommendation
I am not in the business of selling coverage no one needs, and I tell clients when something is optional. On owner’s title insurance, my honest advice is that the protection almost always justifies the one time cost. The right moment to decide is before closing, when the policy issues with the transaction. For the bigger cost picture, see closing costs in Virginia.
There is a quieter benefit too. Because the coverage runs to your heirs, an owner’s policy protects not just you but the people who inherit the home, without anyone paying again. For a single premium, that is durable protection that follows your ownership of the property. It is the kind of coverage you hope never to use and are very glad to have if a hidden claim ever appears.
This applies to buyers across Virginia and West Virginia, on residential and commercial purchases. The choice is yours, and I will give you the straight version so you can make it with eyes open.
Send me your contract and I will explain your options and quote the owner’s policy so you can make an informed choice.
Get Your Free Quoteor call (703) 552-4155Frequently asked questions
Do I really need owner’s title insurance?
It is not legally required, but it is the only policy that protects your own equity against a hidden title defect. The lender’s policy protects the bank, not you. For a one time premium that lasts as long as you own the home, most buyers decide the protection is worth it.
What happens if I skip owner’s title insurance?
You keep the lender’s policy, which protects the bank, but you have no protection for your own equity. If a hidden defect surfaces, such as a forged deed or an unknown heir, you would have to defend your ownership and absorb any loss yourself.
How long does owner’s title insurance last?
As long as you or your heirs own the property. You pay once at closing, and there is no renewal or recurring charge. The coverage stays at the property’s value for the life of your ownership.
Is owner’s title insurance worth it for a cash buyer?
Often especially so. A cash buyer has no lender’s policy at all, so without an owner’s policy there is no title protection whatsoever. The hidden risks are identical whether you finance or pay cash.
Can I buy owner’s title insurance after closing?
It is far better to buy it at closing, when it is issued as part of the transaction and may qualify for a reissue credit. Obtaining coverage later is more complicated and you lose the simultaneous issue savings, so the practical answer is to decide before closing.
This article is general information about owner’s title insurance in Virginia and West Virginia. It is not legal or financial advice for your specific transaction, and coverage depends on the policy you purchase. Please review your policy and confirm the details with me directly.