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Who Pays for Title Insurance?

In just about every state, title insurance is required in order to purchase a home or property. Title insurance protects against your losses if a property’s title to the land is different than what was insured. This is for the protection of the buyer and all other agents involved in the property’s sale.

In a standard purchase contract, the seller purchases title insurance for the buyer. The title insurance ensures the buyer that there are no title defects. The buyer purchases title insurance for the lender to protect their agreement.

Title insurance will not protect the seller. While the seller purchases the title insurance, in actuality, the buyer pays for it through the closing and escrow costs.

Think of it working this way – would you expect a car dealership to purchase your auto insurance?

Business Signing a Contract Buy - sell house.

Why Do I Need Title Insurance?

When you purchase a home or property, you expect to take advantage of certain ownership benefits. For example, you expect to occupy and use the property as you wish, to be free from debts and obligations not created or agreed upon by you, and to be able to freely sell or pledge your property as security for a loan. Title insurance covers those rights.

When Do You Pay for Title Insurance?

Title insurance is included in most closing costs. Other closing costs may include loan origination fees, discount points, appraisal fees, title searches, surveys, taxes, deed-recording fees, and credit report charges.

The cost of title insurance varies depending on the value of the property. Average closing costs range between 2-6% of the home’s value. Keep in mind, this is a one-time cost. The coverage continues for as long as you have an interest in the covered property.