Title insurance is the cheapest and best insurance you will ever buy. Period. Seriously. Okay, I know that I am biased given I work for Chicago Title Insurance Company Canada, but a big part of why I work here is that I believe in the product. I know all of the arguments about insurance and how expensive it is and when one tries to make a claim, there are issues. I get it. The industry doesn’t have the best reputation – although, on that front I have to tell you the last two times I dealt with other insurance companies (Car accident and Life insurance policy – not mine thankfully), the service and speed was stellar. In any event, Title insurance is different. Title insurance is the cheapest insurance you will ever buy because it is a 1 TIME PREMIUM. That’s right. You pay the premium, which across Canada the average premium is $400 for a homeowner (GTA is higher because values are much higher). One only pays that premium once to cover the entire life of a mortgage (which includes any assignments to another lender) or the length of time one owns the property. So, if one buys a house today and owns it for 50 years, the coverage will still apply. Luckily for title insurance companies, Canadians on average own their homes around 5 years, so we actually get to insure properties more than once.
So, what is title insurance and what does it cover? Title insurance covers a homeowner for a myraid of issues relating to a property that home insurance can’t cover for and that a lawyer/clerk/notary can’t protect a homeowner from. It covers matters such as fraud and forgery, survey issues, zoning, work orders and permit issues where the municipality forces a homeowner to fix such problems. It covers the policyholder if there are any actual challenges to the “title” or ownership of your property (or the validity of a mortgage on the property in case of a lender policy) but it goes well beyond that to cover many other issues. So, what happens if a client buys a house and their neighbor subsequently complains that the client’s garage is 3 feet on to her property? Well, title insurance looks at the issue, tries to get the neighbor to be reasonable and settle but if she refuses and wants to be “that” nasty neighbor we always hear about, the title insurer will pay to have the garage moved or the offending portion moved off of the neighbor’s property. Title insurers see all sorts of claims around building permits, unpaid taxes, construction liens, and sadly and rapidly increasing fraud and forgery where someone fraudulently discharges and/or places a new mortgage on title to a property they don’t own. This causes a total mess for the homeowners and the lenders involved and sorting out the mess can be very costly. The beauty of title insurance, in this scenario, is that the title insurer pays the legal fees to sort it out and if the lender ultimately loses priority or the validity of its mortgage or property, title insurer pays the homeowner or the lender the loss without deducting the legal fees incurred to remedy the situation.
While no one loves insurance, as one pays for it and usually don’t need it, its value is often appreciated when there is possibility of a material loss, but the homeowner doesn’t have the right insurance in place. Title insurance is such a simple, inexpensive and invaluable insurance to have that any mortgage professional can categorically and without hesitation recommend it to a homeowner for protection against perils described above and for peace of mind.
Written by John Rider, Senior Vice President, Retail and Commercial Title Insurance, Chicago Title Insurance Company Canada
Published by Private Matters Today. Click here to read the published article on Private Matters.