by Pam Grover, Marketing Director, First Montana Land Title Company
Title insurance guarantees that you are protected from financial loss due to undisclosed removal of rights or claims of ownership on the property prior to your purchase. As the term "insurance" implies you are compensated if later documents or claims surface that remove rights assumed or implied to be included in your title causing loss of value to you.
Additionally, most lenders will not finance a purchase of property without title insurance.
If the Lender requires title insurance why can't the lender purchase it?
There are two basic kinds of title insurance - owner and lender. Normally the seller purchases title insurance for the new buyer in the amount of the purchase price and the borrower (buyer) purchases title insurance for the lender in the amount of the mortgage.
When the mortgage is paid off, the lender's title insurance contract expires. The owner's title insurance contract is in effect for the life of the insured's ownership. There are no annual premiums, only the payment at the time of purchase (or refinance).
Please see First Montana's website for more indepth and detailed information regarding title insurance.