Owner’s title insurance is a simple insurance product that most protects you from the possibility that someone may come along and contest your ownership of a property.
Money expert Clark Howard recommends that every homeowner buy their own home title insurance, rather than relying on the insurance purchased by the lender.
The company Home Title Lock, on the other hand, offers a subscription monitoring service that will alert you to court filings affecting your home’s title, but it is not the same as home title insurance. In this article, we’ll explain why.
What Is Owner’s Title Insurance and Why Do You Need It?
When you buy a home or refinance one, you need a basic insurance policy that most people just won’t buy…even though being without it can be deadly to your finances.
Picture this: When you do a refinance, you dump Bank A and pay them off with proceeds lent by Bank B. But what if the money is stolen while being wired from bank to bank? In many states, you could owe both mortgages — even though you were doing a refinance in good faith.
That’s just one scenario where an owner’s title insurance policy may have helped.
In general, owner’s title insurance (aka simultaneous title insurance) protects you if and when someone chooses to challenge your ownership of and title to a property.
There’s a big misconception that when you buy a home, you’re paying a premium for title insurance and that protects you. But that’s not the case. That insurance just protects the bank.
“Don’t rely on the title insurance the lender buys,” Clark Howard says. “You need your own.”
Home Title Lock Offers a Title-Monitoring Service
Home Title Lock is different from traditional owner’s insurance. It is a monthly subscription service that promises to alert you to anything affecting your home’s title, which could indicate mortgage fraud.
Once a change is detected, Home Title Lock promises that “our team of experts are here to help you navigate the situation.”
Home Title Lock is a month-to-month subscription that sells for $14.99 (or $149 annually) and can be cancelled at any time.
However, it is not a traditional insurance offering and there’s likely no legal obligation for them to step in with money to shore up your losses financially if you have to file a claim.
In fact, Kiplinger says you can get the same protection for free — simply by checking your property record on the website of your county’s register of deeds.
You may even be able to automate this process if your county offers a consumer notification service. Just sign up and you’ll get an instant text or email should there ever be any changes in ownership on your property record.
Check Out These Direct Sellers of Owner’s Home Title Insurance
So, to recap, the pay service that Home Title Lock offers is meant to be proactive in helping you shut down mortgage fraud before it hurts you. It’s not really intended to make you whole after the fact. That’s what home title insurance is for.
The best way to get owner’s home title insurance is to buy it directly from a reputable seller. Check out these options:
RadianTitleDirect.com sells title insurance directly and claims it can save you up to 25%, though that figure varies widely by state.
So that leaves Radian and TitleForward as viable direct writer alternatives who both have a national focus.
We pulled quotes for sample owner’s title insurance policies on a $300,000 refinance of a home in a Philadelphia suburb. Here’s how Radian and TitleForward stacked up against each other:
More Real-World Advice About Owner’s Title Insurance
Clark’s brother worked as a lawyer in real estate title issues for many years. He would often tell Clark about disputes over property ownership and what rights the owner has. This is something where you as an innocent homeowner, doing exactly what you should trying to buy or refinance a home, can end up being scammed.
“There was a title case a few years ago in which residents of an entire community almost lost their homes. A woman claimed she was part owner of a tract of land that later was divided to form a subdivision. She sued the homeowners in the community for a partial share of the land,” Clark recounts.
“The woman eventually agreed to a settlement. But the homeowners spent several thousand dollars in legal fees to defend their property rights. Owner’s title insurance not only protects you from loss, it also requires the title company to defend you if your ownership is ever challenged.”
Advertisements may try to convince you to buy Home Title Lock. But if you get your own title insurance, the monitoring service they provide really isn’t necessary.
Simply knowing that there are things going on affecting your title is not the same as being protected if someone challenges the ownership of your home. That is what home title insurance is for.