The Truth About Title Insurance
When you bought your home, you likely purchased Title Insurance. This policy is meant to protect your investment if someone shows up at your door with a prior claim to your property. All of a sudden, your title has become ‘clouded’. Well, it was probably clouded all along, but you just found out about it.
So, you’re not worried, are you? If the court supports the prior claim and takes ‘your’ home from you, your loss is insured by Title Insurance, right?
Not so fast, my friend. All insurance policies are governed by two clauses. The first one lists what risks are covered. The second one (and the one few people read) contains the exclusions to the coverages contained in the first clause. And herein lies the rub.
Most Title Policies will have an exclusion for prior claims upon the property that are unknown to the insurer at time of issue. Wording for this exclusion varies amongst insurers, but it will look something like this:
“…or title defects not disclosed in writing to the title company prior to the date of the policy.”
A further problem can happen when there has been a falsification of public records. Generally speaking, this will not be covered. So a fair question might be “how often are public records falsified?” Well, the answer is frightening. More on this topic will come in further blogs.
The above is not to be construed as legal advice. Please contact a competent lawyer for legal advice.