Do You Need Title Insurance? The Pros and Cons of Having Coverage

When buying a home, title insurance is one of the many things you have to consider. Title insurance can help protect you from any potential problems with the title to your property.

But do you need it? This blog post will discuss the pros and cons of having title insurance and help you decide if it is right for you.

What Is Title Insurance?

To consider the pros and cons of title insurance, it’s best to understand what title insurance products are and what they cover. Title insurance is a type of indemnity insurance that protects the lender or owner of a property from any losses resulting from problems with the title.

What Does Title Insurance Cover?

Any real estate transaction requires a clear title; essentially, title insurance is there to cover those involved in the trade from when issues arise. Title insurance covers a wide range of potential problems that could arise with the title of your property. These problems could include:

  • Undiscovered liens or encumbrances on the property
  • Problems with the chain of title
  • Forged documents
  • Mortgage fraud
  • Errors in public records
  • Easements
  • Conflicting Wills

As you can see, title insurance protects from past occurrences with a property, which differs from traditional insurance that protects against future events. Now that we have a better understanding of title insurance and what it covers, let’s look at how a title company does its job and who typically deals with it.

How Does A Title Insurance Company Do Its Job?

When you purchase title insurance, the title company will thoroughly research your property history to ensure there are no outstanding claims or problems with the title. The title company will also issue a policy outlining what is covered and to what extent.

If any problems arise with the title to your property, it is the title company’s job to rectify the situation. This could involve anything from negotiating with another party to pay off a lien on the property to going to court to clear up discrepancies in the chain of title.

Now that we know a little bit more about title insurance let’s look at some of the pros and cons of having coverage.

The Pros Of Title Insurance

Because sellers must pay the lenders’ policy, which may be one of their more significant closing expenses, owners and purchasers avoid paying an owners’ insurance premium. But, on the other hand, cash might be tight for someone facing many future years of ownership without title protection. In other words, it’s risky to go without title insurance.

  • As we mentioned before, one of the main benefits of title insurance is that it protects you from any potential problems with the title to your property.
  • Another great benefit of title insurance is that it can help speed up the closing process. Because the title company will have already thoroughly searched the property’s history, there is less of a chance that any problems will arise and delay the closing.
  • Most Title companies will discount the owner’s policy because they usually don’t have to conduct multiple searches on the property.
  • While the value of a lender’s policy declines over time, as the principal is paid, an owner’s policy remains in full effect for as long as the same person or their family owns the property.
  • Lastly, another pro of title insurance is that it offers peace of mind. Knowing that you are protected from any potential problems that could arise with your property can give you a sense of security and peace of mind.

The Cons Of Title Insurance

  • One of the main drawbacks of title insurance is that it can be expensive. The price of title insurance depends on a number of factors, including the value of your property, the type of coverage you choose, and the state in which your property is located.
  • Another con of title insurance is that it only covers certain types of problems. As we mentioned, title insurance does not protect against future issues, such as zoning changes or code violations.
  • Lastly, some people view title insurance as unnecessary because they feel that the chances of something going wrong with the title to their property are slim.

So, do you need title insurance? The answer is that it depends. Let’s take a look at the risks of not having coverage.

The Risks Of Not Having Coverage

If you choose not to purchase title insurance and something does go wrong with the title to your property, you could be facing some serious financial problems.

  • For example, if it is discovered that there are outstanding liens on the property, you would be responsible for paying them off. If you are unable to do so, the bank could foreclose on your home.
  • Another risk of not having title insurance is that you could end up paying for someone else’s mistakes. For example, if the previous owner of the property failed to pay their taxes, you could be responsible for paying them.
  • Lastly, if there are any discrepancies in the chain of title, you could be facing a lengthy and costly legal battle to clear them up.

So, while title insurance is not required by law in New Jersey, it is definitely recommended and something to consider if you want to protect yourself and your investment.

Hiring A New Jersey Title Insurance Company

Sunnyside Title Company is a New Jersey-based title insurance company that has been providing quality title insurance services to our customers. With over 30 years of combined experience, our team of title insurance experts is dedicated to providing you with the best possible service.

Sunnyside Title Company offers a variety of title insurance products, including owner’s policies, lender’s policies, and title searches. If you’re looking for a New Jersey title insurance company that you can trust to go the extra mile, look no further than Sunnyside Title Company. Contact us today to learn more about our services or get a free quote.

We hope you found this blog post Do You Need Title Insurance? The Pros and Cons of Having Coverage useful. Be sure to check out our post Top 8 Essentials for Your Complete Office Security for more great tips!


Do You Need Title Insurance? The Pros and Cons of Having Coverage

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