Title insurance is one of those closing-cost line items buyers pay for without really knowing what it does. Here’s the plain-English version — and why it’s worth understanding.
What title insurance protects against
When you buy a home, you’re buying its title — the legal right of ownership. Title insurance protects you (and your lender) against problems with that title that existed before you bought: things like unknown liens, errors in public records, undisclosed heirs, fraud, or boundary disputes. If a covered claim surfaces later, the policy helps cover the legal costs and losses.
Unlike most insurance, it’s a one-time premium paid at closing that protects you for as long as you own the home.
Owner’s policy vs. lender’s policy
There are two separate policies:
- Lender’s policy — protects the lender’s interest in the property, up to the loan amount. If you’re financing, the lender requires it.
- Owner’s policy — protects you, the buyer, and your equity. It’s the one that actually protects your ownership.
You want both. The lender’s policy does nothing for you personally; the owner’s policy is your protection.
Who pays in Texas?
In a typical Texas resale transaction, the owner’s title policy is often a seller expense (though, like everything, it’s negotiable), while the buyer typically pays for the lender’s policy and related title fees. Your closing statement will spell it out. (See Understanding Closing Costs in Texas.)
Why it matters
Most of the time you’ll never need it — but when a title issue surfaces, it can save you from a costly legal mess or even a threat to your ownership. It’s quiet protection on the biggest purchase of your life.
Questions about a specific closing? Reach out.
General educational information, not legal advice. Title policies, coverage, and who-pays customs vary and are negotiable. Confirm specifics with your title company.