Seeing two title insurance policies on your closing paperwork can be confusing, especially if you’re paying for both.
The difference is who each policy protects. A lender’s policy protects the mortgage lender’s interest. An owner’s policy can protect yours if a covered title problem from the property’s past comes to light after you buy the home.
Here’s what to know before closing.
Have a question about the title charges on your paperwork? Contact Berkshire Title Company and ask for a clear explanation.
What Does Lender’s Title Insurance Protect?
A lender’s policy protects the lender’s interest in the property. Most lenders require one when you take out a mortgage.
The detail many buyers miss: Paying for this policy does not mean it protects you. According to the CFPB, lender’s title insurance does not protect your equity in the home.
Key takeaway : The lender’s policy is for the lender, even when its cost appears among your closing charges.
What Does Owner’s Title Insurance Protect?
An owner’s policy can protect your ownership interest if a covered issue connected to the property’s past is discovered after closing.
For example, a previous owner may have left unpaid property taxes, or a contractor may claim they were not paid for work done before you bought the home. Your protection depends on the policy’s terms and exceptions.
Key takeaway : If you want to know what protection you would have, ask about the owner’s policy.
Do You Need Both Policies?
If you’re using a mortgage, your lender will usually require its policy. An owner’s policy is a separate decision for you as the buyer. One does not replace the other because they insure different interests.
Before deciding, ask :
- Who is insured under each policy?
- What does the proposed owner’s policy cover?
- What exceptions apply?
- What will the total title-related cost be?
You can read more about Berkshire’s title insurance services or bring these questions to the team before closing.
Who Pays for Title Insurance?
There isn’t one payment arrangement for every home purchase. Who pays can depend on the purchase agreement and local practice. The price can also vary by transaction and state.
If you receive a title quote, compare the total cost, including related title services. The CFPB notes that buying an owner’s and lender’s policy from the same provider is usually less costly than buying them separately.
What to ask : “Can you show me the cost of each policy and the total I’ll pay?”
Why Don’t the Amounts on My Closing Documents Match?
Your title company’s itemized quote may show the policy charges differently from your Loan Estimate or Closing Disclosure. That does not automatically mean you are paying more.
The CFPB recommends comparing the bottom-line total of all title-related charges. If you cannot reconcile the amounts, ask your lender and title company to explain them before you sign.
What Happens If You Refinance?
An owner’s policy generally continues while you retain an ownership interest in the property, subject to its terms. A lender’s policy generally ends when that loan is paid off.
If you refinance, the new lender will commonly require a new policy for the new loan. Refinancing does not generally mean you must purchase a new owner’s policy for the same ownership interest.
Final Thoughts: Know Who Your Policy Protects
Lender’s title insurance protects the lender. Owner’s title insurance can protect you. That distinction makes it easier to review your options and ask informed questions about your closing costs.
At Berkshire Title Company, buyer education comes first. You Have a Choice and you deserve to understand it. If you have questions about a proposed policy or title charge, contact Berkshire before closing.
