While owner's title insurance is usually optional, it is strongly recommended when buying a home. It protects one of the largest investments you'll ever make.
Here's the difference between the two types of title insurance:
Lender's Title Insurance (Usually Required)
If you're getting a mortgage, your lender will almost always require a lender's title insurance policy. This protects the lender's financial interest, not yours. The cost is typically paid as part of your closing expenses.
Owner's Title Insurance (Optional but Recommended)
An owner's policy protects you if a title issue arises after you purchase the home. It's a one-time premium that provides coverage for as long as you (or your heirs, in many cases) own the property.
It can protect against issues such as:
Unknown liens against the property
Errors in public records
Forged signatures on past deeds
Undisclosed heirs claiming ownership
Mistakes in legal descriptions or surveys
Recording errors
Fraud or identity theft affecting prior transfers
Why It Matters
Even if a title search is performed before closing, some problems aren't discoverable at that time. If a covered title defect is found later, title insurance can help pay legal fees and covered financial losses.
Is It Worth It?
For most buyers, yes. You're making a significant investment, and title insurance is a relatively small, one-time cost compared to the potential expense of defending your ownership rights.
Advice for Massachusetts Buyers
In Massachusetts, both a title examination by a real estate attorney and title insurance are common parts of the home-buying process. While the attorney's title search helps identify issues before closing, title insurance protects you if an undiscovered problem surfaces later.
For most homebuyers, purchasing an owner's title insurance policy provides valuable peace of mind and financial protection.
As a REALTOR®, it's also a good reminder to explain to buyers that:
The lender's policy does not protect them.
The owner's policy is separate and protects their ownership interest.
The premium is paid once at closing—there are no annual premiums.
This is one of those closing costs that many homeowners hope they'll never need, but if a title issue ever arises, it can save thousands of dollars in legal fees and protect their ownership of the home.