Why is Title Insurance Important?

Purchasing real estate is often one of the largest investments you’ll ever make. Title insurance offers peace of mind, ensuring that the property you purchase truly becomes yours, free of hidden legal encumbrances. It protects against financial loss if a covered title problem arises, covering the cost to defend your ownership in court and paying valid claims up to the policy limit.

What Does Title Insurance Cover?

Certain unknown liens and unpaid property taxes that existed prior to closing and were not excluded from coverage
Errors in public records or improper legal documentation
Fraud, forgery, or impersonation by past owners
Undisclosed heirs or conflicting wills
Depending on your specific policy and endorsements, title insurance can help resolve boundary disputes or issues caused by improperly recorded deeds

For example, imagine purchasing a new home only to discover six months later that a prior owner’s unpaid contractor has placed a lien on the property. Without title insurance, you might have to pay the lien or fight it legally, risking your investment. In many cases, title insurance may cover those costs, subject to the terms, conditions, and limits of your policy.

Types of Title Insurance: Owner’s Policy vs. Lender’s Policy

There are two types of title insurance, and each protects a different party in a real estate transaction: Owner’s Title Insurance protects the buyer for as long as they own the property. It covers financial loss and legal defense costs if a covered title issue arises after closing.

Lender’s Title Insurance (Loan Policy) protects the lender’s interest in the property and is required with most mortgages. It does not protect the homeowner; that’s what the owner’s policy is for.

This article focuses specifically on Owner's Title Insurance, which is the policy that protects the buyer’s investment.

Common Misconceptions

A title search means I don’t need insurance. Even the most thorough searches can miss hidden risks, such as old claims or recording errors.
It’s just like homeowners insurance. Title insurance is a one-time purchase paid at closing and covers ownership disputes, while homeowners insurance requires ongoing premiums and protects your home and belongings against fire, theft, or natural disasters.
Problems only happen with older properties. Even new developments can have title defects if a previous sale was not properly documented or taxes were overlooked.

Real-World Examples

A homeowner discovered, after purchasing, that the property line encroached on their neighbor’s lot due to a decades-old survey error. Title insurance resolved the dispute and covered related costs.
In another case, a buyer was protected when a forged signature on a deed surfaced, challenging their ownership. The title insurer handled the legal defense, saving the buyer from costly litigation and giving them peace of mind.

*Note: Actual coverage depends on the specific policy, endorsements, and any exceptions listed in your title commitment. Always review your policy and consult your title professional or attorney with questions.

Title Insurance vs. Homeowners Insurance

ASPECT	TITLE INSURANCE	HOMEOWNERS INSURANCE
SCOPE	Protects against past defects in property ownership/title	Protects against future damage to home and possessions
PAYMENT	Paid once at closing	Ongoing annual or monthly premiums
COVERAGE	Legal defense, financial loss due to covered title defects	Fire, theft, storm damage, liability, personal property
BENEFICIARIES	Owner and/or lender	Homeowner

Why Choose Elevated Title?

At Elevated Title, our team of experts delivers the highest level of care and local expertise to make your transactions stress-free. With deep knowledge of Colorado real estate law and decades of industry experience, we’re committed to exceeding your expectations at every step, protecting your assets with integrity and efficiency.

If you have further questions about title insurance or your real estate transaction, don’t hesitate to reach out. Your peace of mind is our priority.

Investor Services

Elevated Title provides a wide range of investor services designed to make real estate investing in Colorado simple, efficient, and secure. Investor clients benefit from the company’s deep knowledge of local market regulations, tailored solutions for quick sales or property flips, and robust title insurance options that protect against unexpected costs and ownership disputes.