A title policy is only as useful as your understanding of it. The covered risks are powerful, but every policy also has exclusions and exceptions. Let me walk through both sides so you know exactly what protection you are buying.
Written by Anthony I. Shin, Esq., Principal and real estate attorney at Prime Title & Escrow
Title insurance covers hidden problems from a property’s past. To use it well, you need to know both what it protects against and the categories it deliberately leaves out. Here is the honest version of both.
A policy covers hidden past defects in the chain of title. It excludes broad categories such as zoning and eminent domain, and problems you created or knew about. It also takes exceptions for specific items found in the title search, like a recorded easement. Reading these three parts of your policy tells you exactly what you are protected against.
What a policy covers
The core protection is against defects that existed before you bought but were not known at closing. The Virginia State Corporation Commission lists common examples: judgments and liens against a prior owner, unpaid real property taxes, an outstanding ownership interest someone else holds, and fraud or forgery in a prior deed or power of attorney. It can also cover problems involving a minor or an incapacitated person in the chain that were unknown when you purchased. These are the hidden risks a search cannot always catch, and they are exactly what the policy is built for.
What a policy excludes
Every policy also lists exclusions, which are broad categories it does not insure. These commonly include governmental police power such as zoning and building codes, the government’s power of eminent domain, and any problem you created, agreed to, or knew about and did not disclose. A standard policy also generally does not cover a defect that arises after the policy date, since the policy speaks to the title as of closing. None of this is a loophole; it is the defined scope of the coverage.
Exceptions: the specific items
Separate from the broad exclusions, a policy takes exceptions for specific things the title search actually found and that you are accepting, such as a recorded utility easement or a subdivision’s restrictive covenants. These are listed in the policy and the commitment so you can see them before closing. Part of my job is reviewing those exceptions with you so there are no surprises about what is and is not insured.
Some of what a standard policy excludes, an enhanced owner’s policy adds back in limited form, including certain matters that arise after closing such as some forgery or encroachment issues. It costs more for broader coverage. I compare the two in enhanced versus standard owner’s title policy so you can decide which fits your situation.
Read the policy
The single best habit is the one the Virginia State Corporation Commission recommends: read the policy and know exactly what it does and does not cover. I go through the commitment and the policy with every client, because a policy you understand is worth far more than one you simply sign. For how this fits your other costs, see title and settlement fees.
A quick example makes the line clear. If a previous owner forged a signature to transfer the property before you bought it, that is a hidden past defect your policy is built to cover. If the county later rezones your street, that is governmental police power, a standard exclusion, and not something the policy insures. Same property, very different outcomes, decided by which side of the coverage line the problem falls on. Knowing that line in advance is what lets you buy the right coverage rather than assume you are protected against everything.
These coverage principles apply on residential and commercial closings across Virginia and West Virginia. The covered risks are strong and the exclusions are clear once someone walks you through them, which is what I am here to do.
Send me your title commitment and I will walk you through what your policy covers, excludes, and excepts.
Get Your Free Quoteor call (703) 552-4155Frequently asked questions
What does title insurance cover?
It covers losses from defects in a property’s ownership history that existed before you bought but were unknown at closing. The Virginia State Corporation Commission lists examples such as judgments, liens, unpaid real property taxes, outstanding ownership interests, and fraud or forgery in a prior deed or power of attorney.
What does title insurance not cover?
A policy lists exclusions and exceptions. Common exclusions include governmental zoning and police power, eminent domain, and problems you created or agreed to or knew about and did not disclose. A standard policy also generally does not cover defects that arise after the policy date.
Does title insurance cover zoning or building code issues?
Generally no. Governmental police power, including zoning and building codes, is a standard exclusion on most policies. Some enhanced owner’s policies add limited coverage for certain matters, so read your policy or ask me about the enhanced option.
What are exceptions on a title policy?
Exceptions are specific items the policy does not insure because they were found during the title search, such as a recorded easement or a restrictive covenant. They are listed in the policy so you know what is and is not covered before closing.
Does title insurance cover liens I take on after closing?
No. The policy protects against defects that predate your ownership. A new lien you take on later, such as a second mortgage, is not a hidden past defect and is not covered.
This article is general information about title insurance coverage in Virginia and West Virginia. It is not legal or financial advice for your specific transaction, and coverage, exclusions, and exceptions depend on the policy you purchase. Please review your policy and confirm the details with me directly.