Title insurance is the part of a closing that protects the single most important thing you are buying: the right to own your property free and clear. It is also widely misunderstood. Let me explain what it is, what it protects, and why nearly every buyer should have their own policy.
Written by Anthony I. Shin, Esq., Principal and real estate attorney at Prime Title & Escrow
Most insurance protects you against something that might go wrong in the future. Title insurance is different. It protects you against problems that already happened in a property’s past but were hidden when you bought it. That difference is the key to understanding the whole product.
Title insurance is a one time policy you buy at closing that protects against losses from defects in a property’s ownership history. The Virginia State Corporation Commission explains that coverage becomes effective when your transfer is recorded in the local land records, in exchange for a single premium. There is no recurring charge.
Why a clean title is never guaranteed
Before you buy, my office searches the public land records to trace ownership and find anything attached to the property. That search catches most problems, and we clear them before closing. I describe that work in what a title and escrow company does. But some problems are invisible to even a careful search: a forged signature decades ago, an heir nobody knew about, a deed signed by someone without authority, or a recording mistake at the courthouse. Title insurance covers those hidden risks.
Two policies, two jobs
There are two kinds of title insurance. A lender’s policy protects the bank’s interest in your loan and is required whenever you finance. An owner’s policy protects your own equity. They sound similar, but they protect different people, and the lender’s policy does nothing for you. I explain the split in owner’s versus lender’s title insurance, and why most buyers want both in do you really need owner’s title insurance.
What it protects against
The Virginia State Corporation Commission lists common title defects that a policy can cover, including judgments, liens, unpaid real property taxes, outstanding ownership interests, fraud or forgery in a prior deed or power of attorney, and problems involving a minor or an incapacitated person that were unknown at the time of purchase. For the full picture of what is and is not covered, see what title insurance covers.
A one time cost that lasts
You pay the premium once, at closing. An owner’s policy then protects you for as long as you or your heirs own the property, with no renewal and no monthly charge. The cost depends on the price and loan amount, and Virginia has some features worth knowing about, including a discount called a reissue credit. I cover the numbers in how much title insurance costs in Virginia and the discount in the reissue rate.
Title insurance is part of the title and settlement section of your closing costs, which I break down in title and settlement fees. For buyers it folds into the overall closing costs in Virginia. It is usually a modest share of the total, and it protects the thing the whole transaction is built on.
The same protection in two states
Before your policy issues, you receive a title commitment, which is the insurer’s promise to issue the policy once the listed requirements are met and subject to the listed exceptions. Reviewing that commitment with you before closing is how we catch and clear problems while there is still time to fix them, rather than after the deed is signed. It is one of the most useful documents in the whole file, and I never let a client sign without understanding it.
These principles apply on residential and commercial purchases across Virginia and West Virginia. The owner’s and lender’s structure is the same in both, with each state’s insurers filing their rates with their own regulator. If you are buying in West Virginia, see title insurance in West Virginia. Wherever you are buying, I walk every client through the choice so it is a real decision, not a line you sign without understanding.
Send me your contract and I will explain your title insurance options and quote your policy as part of a clear estimate.
Get Your Free Quoteor call (703) 552-4155Frequently asked questions
What is title insurance in Virginia?
Title insurance is a one time policy that protects you against losses from problems in a property’s ownership history, such as old liens, judgments, forgery, or recording errors. According to the Virginia State Corporation Commission, coverage takes effect when your purchase is recorded in the local land records, in exchange for a single premium paid at closing.
Is title insurance a one time cost or a recurring one?
It is a one time cost. You pay a single premium at closing and there is no monthly or annual charge. An owner’s policy then protects you for as long as you or your heirs own the property.
What is the difference between an owner’s policy and a lender’s policy?
A lender’s policy protects the bank’s interest in your loan and is required when you finance. An owner’s policy protects your own equity. The lender’s policy does nothing for you personally, which is why most buyers also purchase an owner’s policy.
Does title insurance cover problems that happen after I buy?
A standard policy protects against defects that existed in the past but were unknown at closing, not new problems you create later. An enhanced owner’s policy adds some coverage for certain matters that arise after closing. Always read your policy to see what is covered.
Is title insurance required in Virginia?
A lender requires a lender’s policy when you finance. An owner’s policy is not legally required, but it is the only thing that protects your own equity against a hidden title problem, so most buyers choose to buy one.
This article is general information about 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.