About Title Insurance

In Texas the title insurance premium rates, and the rating rules for applying them, are adopted by the Insurance Commission of the State of Texas. The rating rules are quite specific and violations can result in suspension of licenses.

When is a title policy terminated?

Unlike other types of insurance the title policy never goes out of effect. Even though the insured sells the property and goes out of title, he still has an obligation by virtue of the warranties in the deed he conveys the property with, and consequently, the policy insuring him still is in effect.

How does title insurance differ from other types of insurance?

Most insurance tries to protect against losses arising out of possible future events. The primary purpose of title insurance is to prevent losses from defects in title arising out of past events.

Are there any general exceptions to what is covered in a title policy?

Yes. Easements, deed restrictions, zoning requirements, mortgage liens, and certain other categories of limitations on the use of property are specifically exempted, or otherwise not covered.

In general, are there any liabilities against which the Owner's Policy does not protect?

Yes. Actions of the government are not covered. Also not covered are items that the buyer (owner), as an "informed purchaser" should know about, such as a power pole or a neighbors driveway encroaching on the property.

Who is protected by the Owner's Title Policy?

Both the buyer and the seller are protected.

Who is protected by the Mortgagee's Title Policy?

Only the lender is covered by the Mortgagee's Title Policy.

Why are two policies needed? Isn't this a duplication of coverage?

The Owner's Policy insures the owner up to the full purchase price of the property for as long as he or his heirs own the property. The Mortgagee's Policy insures that the lender has a valid lien on the property up to the unpaid balance of the loan. The hazards may be the same, but the "insured party"... and the coverage amount... is different with each type of policy.

Can a Mortgagee's Policy be purchased without an Owner's Policy?

Yes; each title policy is purchased separately.

Would a Mortgagee's Policy protect the buyer as well as the lender?

Only to the extent the loan would be paid off if there were a loss. This "indirect" protection to the owner would decline as the loan is paid down. There would be no equity protection to the buyer.