Enhanced Title Insurance: Is the Upgrade Worth It?

When you buy a home, you're handed a stack of decisions to make and, somewhere in the mix, there's a decision you may not even realize you needed to make: whether to purchase a standard owner's title policy or step up to an enhanced version.

Most buyers have never heard of the difference. Here's what it actually means for you.

What a Standard Policy Covers

A standard owner's title policy protects you against title problems that existed before your purchase, things like a forged deed somewhere in the chain of title, an undisclosed heir with a claim to the property, or a lien nobody caught during the title search. It's a one-time premium at closing, and the coverage lasts as long as you own an interest in the property.

That protection is very valuable. But it has limits, and those limits are why an enhanced policy exists.

What Enhanced Coverage Adds

Enhanced owner's policies (sold under various brand names depending on the underwriter) extend protection into territory a standard policy simply doesn't reach, much of it centered on problems that surface after you close, not just before:

• Post-policy forgery. Protection if someone forges a document affecting your title after you've already purchased. (Especially important for properties without a mortgage to prevent a bad actor from attempting to sell your home out from underneath you.)
• Post-policy encroachments. Coverage if a structure built on your property or your neighbors turns out to encroach across the boundary line.
• Boundary and survey issues. Coverage for certain encroachments a survey would have caught, without requiring you to purchase a new survey.
• Living trust protection. Coverage that extends not just to a trustee, but to the named beneficiaries of a living trust.
• Automatic coverage increases. Unlike a standard title policy where the coverage limit is fixed, the enhanced policy increases over time for a set period so your protection has a chance to keep up with appreciation.
• Zoning and building permit violations. Coverage if it turns out a prior owner made improvements without the required permits.

The specific list of covered risks varies by underwriter, so it's worth asking your title company exactly what's included in the policy being quoted.

Who Qualifies

Enhanced coverage isn't available on every transaction. It's generally limited to:

• Owner-occupied 1-4 family residences (including condominiums)
• Completed, improved structures, not vacant land, and not property still under construction
• Purchases by individuals or trustees of a living trust established for estate planning purposes

Commercial property held in a partnership or corporation, mobile homes, vacant land, and properties with unresolved boundary disputes or legal description problems generally won't qualify.

What It Costs

Enhanced policies cost more than a standard policy, but the increase is usually modest relative to the additional protection, especially compared to the cost of litigating a title defect after the fact. Ask us for a side-by-side quote on both options so you can weigh the difference for yourself.

Most buyers default to a standard policy simply because nobody walks them through the alternative. If you're making one of the largest purchases of your life, it's worth five minutes of conversation with your title company to understand your title insurance options, and to make a conscious decision rather than default to the "norm".

Have questions about which title policy fits your purchase? Our team at Luminary Title Group is happy to walk through the options with you before you get to the closing table.