Title insurance is a special kind of insurance that will protect you against loss after the purchase of your home if a third party attempts to claim title to the property for example in the form of easement, lien or ownership. Title companies work in advance of issuing your policy to identify and eliminate potential risks and therefore prevent losses caused by title defects that may have been created in the past. The greatest part of the title insurance premium therefore goes towards risk elimination in the form of examining ownership of the home going back to what is called the "Root of Title".

Buyers and lenders in real estate transactions should obtain title insurance. Both need to know that the property they are investing in is insured against certain title defects. Title companies provide this insurance coverage. The seller, buyer and lender all benefit from the insurance provided by title companies.

There are two types of title insurance policies: An "owner's" policy which insures you, as long as you or your heirs own the home; and a "lender's" policy which insures the priority of the lender's security interest over the claims that others may have in the property.   A title insurance policy contains provisions for the payment of the legal fees in defense of a claim against your property which is covered under your policy. It also contains provisions for indemnification against losses which result from a covered claim. The premium is paid at closing. There are no continuing premiums due, like there are with other types of insurance.