• Debbie Ferraro

A Standard Policy of Title Insurance Covers All Except...

Updated: Sep 29, 2021

Your title insurance policy provides coverage for many different title defects, but there are still some circumstances in which title insurance won’t cover your losses. What does title insurance cover? And what’s not covered by your title insurance policy? We answer these important questions below.

What Is Covered By Title Insurance?

Title insurance is a type of indemnity insurance that protects against financial losses that result from challenges or defects in your title to a property. While most of these defects can be identified prior to closing on a purchase, there is still a chance that defects exist unknown to buyer and seller. These defects can result in financial losses and even the loss of your home without the protection of title insurance.

Title insurance covers the following types of title defects:

  • Forged deeds, releases, wills, or other legal documents

  • Failure of spouses to join in conveyances

  • Missing or undisclosed heirs

  • Deeds from illegal aliens, minors, or persons of unsound mind

  • Mistakes in public records

  • Liens placed on a property due to unpaid estate, inheritance, income, or gift taxes

  • Errors in recording legal documents

  • Deeds from defunct corporations or companies

  • Unprobated wills

When the title to a property is in dispute, title insurance will cover the policyholder’s legal expenses, settlement, and judgment costs up to the policy limit. The title insurance required by a lender protects their interests, while owner’s title insurance covers the interests of the property owner.

What Types of Situations Aren’t Covered By Title Insurance?

Now that we’ve answered, “what does title insurance cover?”, let’s talk about what it doesn’t cover. The most common excluded items fall under the umbrella of standard exceptions, which are excluded in nearly all title insurance policies. These typically include issues relating to government regulations, title defects that you’re aware of when you purchase your property, unrecorded liens, and matters that would be identified by a correct survey. Some examples include:

  • Title defects you’ve created after the purchase of your title insurance policy

  • Ownership issues that result from failing to pay your mortgage

  • Property that has been condemned

  • Issues that are caused by breaking laws or covenants

  • Taxes and assessments

  • Issues resulting from the violation of zoning or building ordinances, typically related to land use, environmental protection, or improvements

  • Certain restrictive covenants that limit the ways you can use your property

  • Claims related to bodies of water that are on your property

In addition to these standard exceptions, there are also special exceptions, which cover your specific property. These exceptions are usually in response to information found during the examination of the public record prior to closing on your property purchase. When you purchase your title insurance policy and sign your contract with the insurer, you are acknowledging the fact that you understand these special exceptions will not be covered by your policy.

Learn More About What Title Insurance Covers

Title insurance can be complicated to understand on your own, which is why our team at American Guardian Title is here to help. Contact us today at 833-331-8476 to learn more about title insurance and how we can protect you, your family, and your property.