What is title insurance?
Title insurance protects both owner and lender from financial loss due to unforeseen legal obstacles. Title insurance is usually required by a bank loaning money to a property owner secured by a mortgage on the property. Most lenders require title insurance as a condition of loaning money to purchase land or refinance an existing mortgage. Owner’s title insurance is a separate policy and highly recommended.
The protection you buy is based on a title search of public records that traces the chain of ownership of the property and includes a guarantee that the title is accurate. The search identifies title problems before your real estate purchase is completed. While almost all other forms of insurance protect you against future events, a title policy is designed to primarily protect you against the hazards of the past.
- Protects against title defects, easement problems, judgments and liens and lack of access
- Is required by lenders making a loan on a property
- Remains in force until mortgage is paid in full
- Helps protect the buyer from title defects, easement problems, judgments or liens and lack of access
- Pays expenses associated with claims or losses
- Remains in force for life ownership of property, including heirs
- Usually required to be provided to the buyer by the seller in a purchase agreement for real property.
Why isn’t a title search sufficient?
Title searches are not infallible. Property records can be indexed incorrectly. There are numerous hidden title risks that not disclosed in the public record.
What do you get when you purchase a title insurance policy?
Typically, title insurance covers the amount of the real estate sales price or the amount of the loan. Payment is a one-time fee rather than ongoing premium, and the policy stays in effect until the buyer sells the property. Risks include invalid and fraudulent real estate sales, and hidden legal encumbrances tied to an existing property title – as in wrong lots, missing parking spaces and litigious, unhappy heirs.
In most areas of Indiana, the seller pays for the buyer’s policy and the buyer pays for the lender’s policy. The charge for a lender’s policy is relatively modest because it is based on the same title research as the buyer’s policy. The cost of title insurance is related to the price of the real estate. The higher the property’s sale price, the more it costs.
How much do title insurance policies cost in Indiana?
The Indiana laws regarding the amount of title insurance premium a consumer is charged have changed dramatically in the last couple of years. Previously, title insurance rates varied from title agency to title agency and most depended upon a contractual price structure agreed to by the title agent and the title insurance company. The law changed on July 1, 2013 and Indiana became a “file and use” state. Under the new law, the Indiana Department of Insurance is required to approve title insurance rates. As of July 1, 2014, the title insurers have the option to join a rating bureau authorized by the new law. Members of the rating bureau will files rates for approval based upon an independent actuarial analysis by a third party.
How can I find a title agent to help me with my transaction?
ILTA has a map of Indiana by county listing the title agencies that are members of the Indiana Land Title Association. Click here to view the directory.
Who regulates the business of title insurance in Indiana?
The Indiana Department of Insurance has a division dedicated to title insurance. The Title Division handles all of the licensing, administrative matters, consumer complaints and enforcement matters regarding title insurance licensees. You can contact the Title Division by clicking here.
How can I check if a title agency is in good standing with the Indiana Department of Insurance?
You can check the license status of a title agency by clicking here.
How can I check if a title agency has been disciplined by the Indiana Department of Insurance?
You can view the enforcement actions the Indiana Department of Insurance has taken against insurance licensees by clicking here.