What Does Title Insurance Cover?

Protecting the homeowner from past defects associated with the home, title insurance protects the homeowner from items associated with the home’s previous owner(s). While most insurance policies cover future problems, the purpose of title insurance is to protect the current homeowner from what happened before the keys were there’s. Often required by mortgage lenders to protect themselves from financial loss, title insurance is not required for homeowners to purchase, but is highly recommended. So before purchasing your own policy, you may be asking yourself: “What does title insurance cover anyway?” Let’s talk about it.

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What Does Title Insurance NOT Cover?

First, let’s discuss what isn’t covered by title insurance. Similar to other insurance policies, your coverage may vary depending on the type of policy you purchased. However, these items are not covered by title insurance:

Defects created after the policy was created.
Defects or problems that the current owner creates.
Issues that arise as a result of failing to pay your mortgage.
Problems associated with failure to obey the law.
Losses resulting from rights claimed by someone else occupying the land.
Specific taxes and assessments.
Violations of zoning or building ordinances related to land use, improvements, land division, or environmental protection.
Condemned land unless a condemnation notice appeared in the public record on the date of the policy or if the condemnation occurred before the policy date.
Ownership claims from others if a body of water such as a river or lake is on or near the property.
Disclosed restrictive covenants that limit the use of the property.