Short answer: Title insurance protects against covered problems with ownership of real estate that existed before you bought it, such as undisclosed liens or recording errors. A lender's policy protects only the lender's interest; an owner's policy protects you and is generally issued for the purchase price. California title insurers must file their rates with the Department of Insurance, and the Department explains that buying both policies at the same closing from the same insurer usually costs less.
Owner's vs. lender's policy
| Policy | Protects | Typical amount |
|---|---|---|
| Lender's policy | The lender's security interest | The loan amount |
| Owner's policy | The buyer's ownership interest | Generally the purchase price |
Source: California Department of Insurance title insurance guide.
Rates are filed with the state
Title insurers, underwritten title companies and controlled escrow companies must file their rates with the Department of Insurance (Insurance Code §12401 et seq.). Filed rates are available through the Department's title insurance filings list.
What title insurance doesn't do
- It isn't homeowners insurance. It doesn't cover fire, theft or liability.
- It looks backward. It covers title defects that existed before the policy date, subject to exceptions listed in the policy.
- Read the exceptions. The preliminary report lists items the policy won't cover, such as easements of record.
Checklist
- Review the preliminary title report with your escrow officer or attorney.
- Ask who customarily pays for the owner's policy in your county; it's negotiable.
- Compare filed rates if you're choosing the title company.
Related: homeowners insurance.
Frequently asked questions
What is title insurance in California?
Insurance that protects against covered defects in ownership of real estate that existed before the policy date, such as undisclosed liens or recording errors.
Does the lender's title policy protect me?
No. According to the California Department of Insurance, a lender's policy protects only the lender. An owner's policy protects the buyer.
Are title insurance rates regulated in California?
Title insurers must file their rates with the Department of Insurance, and filings are publicly available.
Is title insurance the same as homeowners insurance?
No. Homeowners insurance covers damage and liability; title insurance covers ownership defects.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. Not legal, tax or financial advice, and not a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.