In our last post, we discussed four factors of importance surrounding title insurance. We also reviewed why it’s so important to have an Owner’s policy to protect your investment and interest in a property as a homeowner. But are all Owner’s Title Insurance policies the same? If not, what’s the benefit of one type over another?
A Reminder About Owner’s Title Insurance
No matter how new or old a property is, there’s always the risk of clouds on title, or defects. As a refresher, title insurance protects the policyholder against financial losses in the event of title problems or ownership claims to a property. While most Lender’s require homeowners to purchase a Lender’s Title Insurance policy to mitigate any potential losses against their investment, having an Owner’s policy is optional – but highly recommended. Owner’s policies are underwritten with either Enhanced or Standard coverage.
Comparing Enhanced vs. Standard Policies
Though both protect the homeowner against title problems in some regard, reviewing the benefits of Enhanced vs. Standard Owner’s polices really is an apples-to-oranges comparison. An Enhanced policy offers greater protection over a number of title defect categories, when compared with a Standard plan. To make the best decision in your own situation, it’s important to understand how these policies are similar, and how they differ.
Both Standard and Enhanced Title Insurance policies offer coverage for the following:
- Easements or other land rights not listed on your policy
- Ownership stake on your property
- Inability to sell or secure a loan due to unmarketable title
- Lack of pedestrian or vehicular access (Standard policy covers legal access only)
Here’s where they differ. An Enhanced policy offers greater title defect coverage, including in such instances as:
- Forgery after the policy date
- Damage due to easement use
- Existing restrictive covenant violations
- Zoning and subdivision violations
*It’s also important to note that with Enhanced Title Insurance, the policy coverage amount increases yearly to keep pace with property value increase (10% per year, up to 150%).
The Right Policy for Your Needs
Owner’s Title Insurance offers homebuyers peace of mind in knowing they’re covered for potential unexpected title discrepancies, and even more so when choosing an Enhanced policy. While the cost of Title Insurance varies based on sales price, the difference between the Enhanced and Standard Policy usually is only a matter of a few hundred dollars – a small price to pay for covering one of your greatest assets.
At Linear Title & Escrow, we are dedicated to helping you determine the best type of policy for your needs. Our team wants you to understand your options, and takes the time to explain the similarities and differences in policies so that you can make the right decision when it comes to protecting your real estate investment.
Have questions about Title Insurance? We have the answers you need! Contact us today at (757) 340-0340.