There are two types of Title Insurance:
- Loan (Mortgage) Policy
- Owner’s (Fee) Policy
Additionally, there are riders which modify the coverage and benefits
- Fair Market Rider, optional for Owner's Policy.
Loan (Mortgage) Policy
When a real estate purchase is financed, most lenders require the purchaser to buy title insurance to protect them from the risk of loss. This type of title insurance, which is called a Loan (Mortgage) Policy, secures the lender as the insured for the amount financed. The borrower pays the premium, but is not the insured. A Loan (Mortgage) Policy is effective during the term of the mortgage.
Owner’s (Fee) Policy
The borrower/purchaser should therefore also consider the purchase of a Owner’s (Fee) Policy, which protects an owner's equity in real estate. This protection for the buyer is in effect for the purchase price during the entire length of time that the real estate is owned by the insured.
Purchasing a Owner’s (Fee) Policy provides the owner protection against loss of equity from title disputes in real estate even after loans which are secured by the property are reduced or paid in full. When the Loan (Mortgage) Policy and the Owner’s (Fee) Policy are purchased at the same time, the Loan (Mortgage) Policy is available at a lower cost than if it were purchased alone.
Fair Market Rider
A fair market value rider is available at additional cost to protect the escalating value of the property during ownership.