Myths and Truths about Owner’s Title Insurance: Optional or Not?
When it comes to owner’s title insurance, optional add-ons might make it seem like the insurance premium itself is optional in some cases. However, even though that’s true, the idea that title insurance is optional is not a very strong one when we think about the necessity that it represents. While some people might consider the risk of running into scammers or finding homes with clerical errors attached to their titles reasonable, most homeowners who want to protect their investment will correctly identify just how important owner’s title insurance can truly be.
So Is It Optional, or Not?
Considering owner’s title insurance, “optional vs. mandatory” is not a valid debate. While lender’s title insurance will, in most cases, be mandatory for homeowners to pay, owner’s title insurance is 100% optional. This means you have the legal right to refuse getting it, which, depending on whether or not your party is the one that has to supply the title search – depending on the specific rules in your state – can also be a problem for the other party, meaning the buyer, if you are the seller.
Why Does Title Insurance “Feel” Mandatory?
The fact that title insurance is mandatory might be just a myth, but it’s one that has its root in reality. First of all, since lender’s title insurance is not optional, then half of your total title insurance payments will still have to be paid. At the same time, even though when it comes to owner’s title insurance, “optional” is a common word associated with it, owner’s title searches are extremely crucial for uncovering any forms of title discrepancies. Outstanding liens and unmet mortgage payments are just part of the story. What would happen if, 2 weeks after you purchased your beautiful new home, you realize that it was also sold to someone else? Fraud and title disputes often go hand in hand, and the only way to avoid any of the discomfort that’s in store will be to buy an owner’s title insurance policy.
Standard vs. Upgraded Owner’s Title Policies
For owner’s title insurance, optional add-ons and benefits are available every step of the way. In some cases, homeowners can even buy upgraded versions of a standard title policy that will provide you with a lot more than you’ve bargained for. While standard policies offer all the basic protection you’ve probably already heard about, so-called Enhanced owner’s title policies will offer that and much more. By purchasing optional add-ons, you will have solved problems such as fence disputes with neighbors, and you will have gained advanced coverage that will protect you against rarer forms of fraud and disputes.
Are Optional Add-ons Really Necessary?
Most lenders will not require you to pay for an Enhanced owner’s policy. Also, in some cases, you might find the standard offer will be more than enough to provide you with the coverage you need. In cases when homeowners buy highly expensive homes, or when the home is extremely old and title disputes seem inevitable, then it’s usually recommended to purchase the add-ons as well. Just keep in mind that, when it comes down to owner’s title insurance, optional offers should always be weighed carefully, before deciding to pay extra for them.