The rates for
title insurance policies vary from state to state depending on what the policy includes. In some cases, the policy will have just insurance against defects or encumbrances on the title. In others, the policy will include both the insurance, and the costs of title searches and other related expenses. This is one reason why the cost of a title insurance policy can be quite different from one location to another, and it is important for purchasers to understand the terms of their policies. In general, however, most consumers will pay a few dollars per $1,000 in value on the piece of real estate. So a person purchasing a $100,000 home could be looking at $300 to $500 in title insurance costs. Obviously, more expensive homes, or homes with larger loans, will require more expensive policies. Also, policies that have more features and include title searches will be more expensive than those providing insurance coverage alone. However, that may mean that the title-search costs are paid for through a separate fee, so consumers should look at all the title-related costs on their Good Faith Estimate to fully understand the charges.
Unlike other kinds of insurance, a title insurance policy is a one-time purchase, usually paid at the time of closing. The insurance coverage lasts for the life of the loan (in the case of a lender’s policy), or for as long as the purchaser (or his heirs) has an ownership in the property. No additional premium is required. However, any homeowner who is refinancing his or her property may be required to buy another title insurance policy for that new loan, at additional cost.
Title Insurance Quote
An insurance quote is not a policy; it is just an insurance company’s offer of coverage for a specific price. One of the best ways to get a good price on insurance is to get quotes from multiple companies. However, few homebuyers shop around for title insurance, either because they don’t know that they can, or because the many complications of buying a home and getting a mortgage keep them from it.
In some states, shopping around is less important because the rates are highly regulated and it is unlikely that a consumer will get a better price at a different company. In other states, where title insurance rates are not regulated, it may make economic sense to get multiple quotes.
Oftentimes, title insurance is offered for sale by one of the participants in the closing, such as the lender or the attorney. However, the purchaser is not required to buy the insurance that is offered, and is free to get his own policy elsewhere as long as it conforms to the terms of the lender (if the policy in question is a lender’s title insurance policy). In fact, federal law dictates that a lender cannot require a homebuyer to use a particular title insurance company. So it can be beneficial for homebuyers to consider getting multiple quotes for this type of insurance policy.
When getting a quote for title insurance, the homebuyer will need information about the real estate being purchased as well as the loan being used to secure it. In most cases, the size of the loan or the purchase price of the property will dictate the amount of insurance needed.
Title Insurance Companies
A wide variety of companies offer title insurance policies. Some are units of larger companies that provide a wide range of insurance products, while others are smaller specialty companies that focus primarily on title insurance. Because title insurance companies often perform a lot of other services in addition to providing title insurance – such as doing title searches – it is often a specialty business.
Title insurance is often sold through mortgage lenders, attorneys, and other businesses involved in the real estate closing process. However, a homebuyer is not required to buy the title insurance policies offered for sale by any of the people involved in the closing, and can shop around if desired.
While some insurance companies offer discounts for people who buy multiple policies through the same company, this type of discount usually applies to recurring-premium policies such as homeowners insurance or auto insurance, and not with specialty products such as title insurance. However, if a consumer is happy with the service an insurance company provides, and that company offers title insurance, it may be a good choice to buy this product through them as well.
Whether or not different title insurance companies have widely-varying rates will depend on the state in which the company is located, and whether or not rates are regulated there. In highly-regulated states, there will be little difference in the rates offered by different companies. However, it may be beneficial to get multiple quotes in the states that do not regulate title insurance rates, or only provide limited regulation.
Wherever a consumer buys title insurance, it is vital that he or she understands what is included in the policy. Some title insurance policies only provide the insurance itself, while others include the cost of title searches and other services.
