What you need to know before buying title insurance

Know your types of title insurance

There are different kinds of title insurance available to homebuyers. Owner’s Policies protect the purchaser against encroachments onto an adjacent property, previously undiscovered liens and issues around legal access to the property.

However, other forms of title insurance (Lender’s Policy) protect lenders only. All banks require the latter before approving a mortgage.

Not the same as home insurance

Many people confuse title insurance with home insurance.  Title insurance insures against defect in title not property damage.

There are limitations

Like any insurance policy, title insurance has limitations. Policies only cover the property that is insured and do not cover environmental matters or Indigenous land claims.

Title insurance is compensation-based. Every claim is considered individually and, if approved, may be settled in different ways, depending on what is being asked of the homeowner.  Sometimes it’s a cash settlement, based on the appraised value of the loss.

However, unlike other types of insurance policies that must be renewed every year, you do not need to renew your title insurance.  The policy will remain active as long as you are the owner of the property.