Why do I need title insurance?

In the twelve years that i've been a settlement attorney, the single most asked question I get is: "If owner's title insurance is optional, then why should I buy it?" In fact, when I purchased my first condo, I asked the very same question - and I almost opted out of buying owner's title insurance. Lucky for me, I never ended up needing it. But if I had, I probably would have never made it out of law school. Why? Because I would have gone broke trying to defend the title to my condo on my own. 

Owner's title insurance will protect you against any defects in title. Many question why you would need that protection if you have a good title attorney reviewing your chain of title. The answer is, because not every title defect can be readily found, even with the most trained abstractor or title attorney reviewing the title search. For example, a previous deed could have been forged or fraudulently conveyed without the consent of one of the previous title owners. Or someone may have signed a deed under a power of attorney, after that power of attorney had lapsed or expired. These often "quiet" events can come haunt you years later, and they can have the painful impact of taking your home away from you. But with title insurance, you will be defended against these events. 

Purchasing a home can be one of the most significant investments you will ever make. The average cost of owner's title insurance is only about 0.3% of the purchase price - or about $3.50 per $1,000.00 of the title insurance. And the great thing about title insurance, is that you pay the insurance premium once and then you are done. There are no annual premiums to maintain, nor are there any renewal fees to pay. Ever. WIth such a large and precious investment, why wouldn't you purchase this insurance when it only costs a small fraction of what you are spending on your new home? Hopefully you will never be faced with such a devastating event that would strip you of your home. But with owner's title insurance, you can rest easy. You will be protected.