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What’s the difference between title insurance and homeowners insurance?

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

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UPDATED: Mar 19, 2020

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Title Insurance Homeowners InsuranceThe difference between title insurance and homeowners insurance is a simple, but important, distinction.

Title insurance and homeowners are both products that can be beneficial to people who are buying real property.

One of them is concerned with the legal right to own the property, while the other one provides protection if there is a loss on the property itself.

Continue reading to learn all about the differences between home insurance and title insurance and then be sure to enter your zip code in to compare free quotes for insurance!

Title Insurance

Title insurance coverage will protect a property buyer from losses stemming from an issue concerning whether the seller has the right to transfer ownership of the property.

If someone represented him or herself as the legal owner of a property and sold it to a buyer, only to have the buyer find out later on that the deed was fraudulent, the buyer would be out his or her investment. If a lender issued a mortgage to the buyer, that company would be left with nothing to secure the loan.

Title insurance protects the buyer from having to be financially responsible for any liens against the property. Depending on the policy in question, it may reimburse the insured for legal fees spent defending a lawsuit or provide a lawyer for the property owner.

The lender may insist that the home buyer purchase this coverage. The premium is paid by the property buyer in a single payment. The amount of the mortgage is covered. If the property owner wants to protect his or her equity, he or she will have to buy additional coverage for this purpose.

Homeowners Insurance

Homeowners insurance coverage protects the structure of the home and its contents in the event of a loss. The hazards that this type of policy insures against include fire, theft and vandalism. If the house is damaged or destroyed in a fire, the insurance company will either pay for the current value of the items lost or reimburse the owner for their full replacement value.

The type of coverage that the homeowners policy provides depends on the policy terms. Keep in mind that the policy will only pay out a benefit up to the policy limit. The homeowner will also have to pay a deductible before the insurance company will write a check. This is the amount the homeowner has agreed to pay out of pocket before the insurance company will contribute anything toward making the insured whole again after a loss.

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Some policies cover a homeowner against loss of use of the property as well. For example, if the homeowner has to move out of his or her dwelling while it is being repaired or rebuilt, the insurance company would pay a certain amount toward the cost of temporary accommodation. Meals and other expenses incurred because the family has to live away from home may also be covered.

A homeowner insurance policy will also provide some liability protection to the homeowner. If a visitor is injured while on the property, the homeowner policy will pay for the cost of medical bills and expenses incurred as the result of the injury. If the homeowner is sued by the injured person, the insurance company will defend the action by providing a lawyer to represent the homeowner.

If the homeowner has a mortgage on the property, the lender will probably require him or her to have insurance coverage in place. This protection is designed to protect the lender’s interest in the property if a loss occurs.

Buying the Coverage You Need

Title insurance may not be required, but it’s a good idea to consider putting it in place if you are buying a property. If you are arranging a mortgage for your purchase, the lender will advise whether you need to buy this coverage as a condition of getting the loan.

Your home is probably the largest single purchase you will ever make. Even if the house doesn’t have a mortgage, you will want to be sure that you protect it against damage or a total loss.

You always have the option of buying coverage that will protect your interests, whether it is required or not. An insurance company or an independent insurance agent can help you determine what level of coverage makes sense for your needs. They can also provide you with information about your coverage options and what the policy exclusions are.

To find out how much you will need to pay for title insurance and homeowners insurance, click on the free insurance quote tool on this page. You can find out about what different companies have to offer, quickly and conveniently. Why don’t you get started right now?

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