Title insurance and wire fraud prevention solve different problems, and it helps to know which is which. An owner’s policy will not rescue a misdirected wire, but it is a real defense against fraud that attacks your title. Let me draw the line clearly.
Written by Adam L. Engel, Esq., Principal and real estate attorney at Prime Title & Escrow
People sometimes assume title insurance covers any fraud at a closing. It does not, and understanding the boundary helps you protect yourself on both fronts. Here is what an owner’s policy does and does not do when it comes to fraud.
Wire fraud prevention protects the money moving through your closing. An owner’s title policy protects your ownership against title defects, including certain fraud and forgery in the chain of title. One is about the transfer of funds, the other about the integrity of your title. You want both, working together.
What an owner’s policy covers
An owner’s policy protects against hidden defects in the property’s ownership history, and that includes certain fraud and forgery. The Virginia State Corporation Commission lists fraud or forgery in a prior deed or power of attorney among the defects a policy can cover. So if a forged signature or a forged power of attorney in the chain threatens your ownership, the policy is what defends your title and pays to resolve it. I cover the full scope in what title insurance covers.
What it does not cover
Here is the boundary that matters. An owner’s policy does not reimburse a wire you personally sent to a scammer based on fraudulent instructions. That is a money transfer problem, not a title defect, so it falls outside what the policy insures. Protecting your wire is entirely a matter of prevention, which is why I put so much weight on sending funds safely and verifying instructions by phone.
Where the policy backs up fraud defense
The policy does play a real role against fraud that attacks title, such as seller impersonation. If a forged or fraudulent transfer affects your ownership, an owner’s policy can provide protection, which is part of why the American Land Title Association points to title insurance as a layer of defense against impersonation schemes. The first line is catching the fraud before closing through careful identity verification, as I describe in seller impersonation and vacant land fraud. The policy is the backstop if something slipped through in the property’s past.
Think of it as two layers. Prevention, through verified wiring instructions and identity checks, stops fraud from succeeding at your closing. An owner’s policy protects your ownership against fraud and forgery hidden in the property’s history. Neither replaces the other, and together they cover both the money and the title. That is why I recommend an owner’s policy to nearly every buyer, as I explain in do you really need owner’s title insurance.
The honest bottom line
If you take one thing from this article, let it be the boundary: verify your wire to protect your money, and carry an owner’s policy to protect your title. They are partners, not substitutes. I make sure every client understands both, so you are not relying on the wrong protection at the wrong moment.
The reason the distinction matters so much is timing. By the time a forged deed in the chain surfaces, it may be years after your closing, and the owner’s policy is what stands behind you then. A misdirected wire, by contrast, is decided in the hours around your closing, when only prevention can help. Knowing which protection answers which moment is what keeps you from leaning on the wrong one when it counts.
This applies on residential and commercial closings across Virginia and West Virginia. Whichever side of the line a fraud attempt comes from, the combination of careful prevention and an owner’s policy gives you the strongest position. I am glad to explain both for your specific transaction.
Send me your contract and I will explain your owner’s policy options and how I protect your funds, so you are covered on both fronts.
Get Your Free Quoteor call (703) 552-4155Frequently asked questions
Does title insurance protect against fraud?
An owner’s title policy protects against certain fraud and forgery affecting the chain of title, such as a forged deed or a forged power of attorney in a prior conveyance. It does not reimburse a wire you personally sent to a scammer, so it works alongside wire fraud prevention, not in place of it.
What kinds of fraud does an owner’s policy cover?
Generally fraud and forgery that affect title, such as a forged signature on a prior deed, a deed signed under a forged power of attorney, or an undisclosed party with a claim. The Virginia State Corporation Commission lists fraud or forgery in prior conveyances among the defects a policy can cover.
Does an owner’s policy cover wire fraud at my closing?
No. An owner’s policy protects your ownership against title defects, not a wire transfer you sent to a fraudulent account. Protecting your wire is a matter of prevention, which is why verifying instructions by phone is so important.
How does title insurance help against seller impersonation?
If a forged or fraudulent transfer affects the title, an owner’s policy can provide protection, which is part of why the American Land Title Association points to title insurance as a layer of defense against seller impersonation. Careful identity verification before closing is the first line, and the policy is a backstop.
Is an owner’s policy worth it for fraud protection?
It is one of several reasons an owner’s policy is worth having. It protects your equity against hidden defects including certain fraud and forgery, for a one time premium that lasts as long as you own the home. I explain the broader case separately.
This article is general information about title insurance and fraud protection in Virginia and West Virginia. It is not legal or financial advice for your specific transaction, and coverage depends on the policy you purchase. An owner’s policy does not cover a wire you send to a fraudulent account. Please review your policy and confirm the details with me directly.