What is Title Insurance?

Title Insurance Protects your Property Rights

An owner’s title insurance policy from Pioneer Title protects your property rights against common real-life title problems that could impact your investment. Title Insurance provides the simplest and best way for you to be comfortable with your ownership of the land and/or home you are buying and knowledgeable about the easements, restrictions and monetary obligations, attached to the land.

For a one-time fee, an owner’s policy provides protection for as long as you or your heirs own the property. In addition to protecting your investment, an owner’s policy also covers the legal fees and the cost of defending your property rights.

Pioneer Title has consistently been the market leader in Idaho and Eastern Washington for over 70 years and we consistently put our expertise to work for you. Our mission is to provide consistent superior, personal service for our customers. With our philosophy of “Going Beyond,” Pioneer Title Company plays a vital role in insuring the American Dream.

1. Safeguards and Protection

New homeowners want to focus on buying new furniture for the living room or painting walls, not worrying about having to pay a bill left behind by a previous owner.

There are two types of title insurance policies. As mentioned, the owner’s policy protects the homebuyer. A loan policy protects the lender. Most lenders usually require a loan policy when they issue you a loan. The loan policy is based usually on the dollar amount of your loan. It only protects the lender’s interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off. An owner’s policy, usually issued in the amount of the real estate purchase, provides protection for as long as you or your heirs have an interest in the property.

 

An owner’s policy protects you from:

  • Unpaid mortgages
  • Unpaid property taxes
  • Child support liens
  • Missing heirs who could claim the property belongs to him or her
  • Missed easements or rights of way that could limit your use of the property

2. Parts of a Title Policy

The owner’s policy has five sections: covered risks, the exclusions from coverage, Schedule A, Schedule B and the conditions.

1. Covered Risks

This section lists what kinds of risks the policy insures against. However, the policy makes it clear that the insurance of the listed risks are subject to (1) the Exclusions listed following the Covered Risks, (2) any exceptions listed in Schedule B, and (3) the Conditions. In the most current ALTA Owner’s policy, there are ten covered risks listed in the policy. Some of the most important covered risks are:

the risk that someone else owns your property
that there is some defect or encumbrance on your title caused by fraud or forgery
any liens for real estate taxes or assessments that are due but unpaid
that your title is unmarketable, that is, you are unable to sell your property to a purchaser because of a title defect
right of access to and from your land.

Review your owner’s policy or ask your title agent about the covered risks included in your policy.

2. Exclusions

Exclusions limit the coverage of the policy. They deal with issues that are outside the control of the title company. The ALTA owner’s policy contains five exclusions, which include matters such as governmental regulations on the land and eminent domain, as well as title matters created or agreed to by the insured, or title defects known to the insured but not disclosed in writing to the title company prior to the date of the policy. The policy does not insure against any defect or title issue that is created or attaches to the property after the date of the policy. Also, the policy does not insure against the effects of bankruptcy law on the transaction creating the insured interest.

3. Schedule A

Schedule A sets forth the specific information on the title and policy, such as the date of policy, the amount of insurance, the insured, the legal description of the land insured by the policy and the estate insured, such as fee simple or leasehold. Schedule A must be attached to the policy in order for the policy to be valid.

4. Schedule B

Schedule B lists the various exceptions to the title that the title company found when it performed its title search. Common exceptions would be things such as prior unreleased mortgages on the property, easements, taxes, restrictions on the use of the property, and any other limitations on the title such as homestead rights or survey issues if no survey has been performed. By listing various items as exceptions, the title company is telling the insured that these items are not covered by the title policy, and that the title company will not pay a claim or defend against a claim based on these excepted items.

5. Conditions

This section outlines the relationship between the insured and the title company.  Paragraph 1 contains the definitions of certain terms used in the policy. Terms such as “Insured,” “Insured Claimant,” “Knowledge” and “Public Records” are defined so as to eliminate any ambiguity.  There are several different paragraphs setting out how a claim under the policy is handled, including how to provide notice of a claim, what is required to prove loss, and the requirement that the insured must cooperate with the title company in the handling of the claim. The Conditions describe the rights of the title company to pay or settle the claim, and the determination, extent and limitation of liability. Most policies also contain a paragraph that allows the insured or the title company to demand arbitration if the amount is under $2 million.

3. Cost of Title Insurance

The cost of a title insurance policy relative to the cost of a property transaction is about one-half to one percent of the purchase price. The premium is based on the purchase price of the property, generally determined by the value of the land plus any improvements.

4. Filing a Claim

If you have a question or concern about your rights, promptly notify us. The title policy includes instructions for contacting the title insurer. This information is usually at the end of the “Conditions and Stipulations” section within the policy.

5. Sign the Purchase Agreement

One of our title officers  will search public records for debts, legal judgments and other homeownership issues to give you peace of mind in your investment. Some of the items reviewed include prior deeds, mortgages, divorce decrees, court judgments, delinquent taxes, or child support payments.