This section gives you answers to the questions we hear most often from home buyers
You are not legally required to have title insurance. If you pay cash for your property you could do without it, but you would leave yourself open to a potentially devastating loss if the property turns out to have a defective title. If you carry a mortgage, the lender almost always requires you to buy a loan (or, lender) policy to protect its interests.
Generally, your policy should provide coverage in an amount equal to the purchase price of your home. The lender’s policy covers the amount of the mortgage.
There’s always the possibility that the title searcher missed something. But there’s also the possibility that there were defects or discrepancies the title searcher could not have found such as forged signatures or misfiled liens or judgments.
There may be a cost of living adjustment in your basic policy, but that does not typically keep pace with increases in the market value of your property. You may want to purchase an inflation rider that will increase the coverage amount as the value of your property increases.
In many states, including Maryland and Virginia, the premium rates are set by the state. That means the premium, or cost of coverage, is the same regardless of which insurance company you choose. Depending on the age of the current policy and other factors, you may be eligible for a reissue rate, and that can mean significant rate reductions. You should ask the title officer about it. In addition to title insurance premiums, there are often local fees for recording documents.
Most often the home buyer pays for both the owner’s policy and the lender’s policy. The premium is included as part of the closing costs. In many states (MD included) the cost for a loan policy is a nominal fee added to the owner’s policy premium.