Owner’s Policy Comparison
All title insurance policies are not created equal. The American Land Title Association (“ALTA”) has two main insurance policies from which home buyers may choose. One is the less expensive 2006 Standard Policy and the other is the 2013 Extended Coverage Homeowner’s Policy. While the standard policy may appear less expensive, the Homeowner’s policy provides far more consumer protection.
For the added cost of around 20%, consumers may purchase the Homeowner’s policy. Keep in mind that unlike other forms of insurance, title insurance is a onetime fee that provides coverage for as long as the insured owns their home. While this policy is optional, the lender’s policy typically does not provide any benefits to the consumer and that it is typically activated only after the lender is placed in title. Since lenders generally require a lender’s title insurance policy to protect them, shouldn’t consumers purchase one too?
| Coverage Comparison | Owner's Policy 2006 | Homeowner's Policy 2013 |
|---|---|---|
| Covered Risks |  |
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| Someone else claims an interest in your title | |
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| Someone else claims to have rights affecting your title because of forgery or impersonation | |
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| Someone else has a lien on your title (such as a Mortgage, judgment, state or federal tax lien, condominium or homeowners' association lien) | |
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| Documents improperly executed | |
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| Documents improperly recorded | |
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| Unmarketability of your title | |
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| No legal access to and from the land | |
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| Someone else has the right to limit your use of the land | |
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| Gap coverage extended from the date of closing to the date of the recording of the deed | |
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| Duration | ||
| Coverage for as long as you own the property | |
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| Policy insures anyone who inherits the property from you | |
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| Policy insures the trustee of an Estate Planning trust to whom you transfer title | |
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| Policy insures the beneficiaries of a trust upon your death | |
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| Extended Coverage | ||
| Parties in possession of the property not disclosed by the public record | |
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| Unrecorded easements affecting the property | |
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| Encroachments and boundary line disputes that would be disclosed by a survey | |
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| Mechanic's lien (a lien against the property due to non-payment of work) | |
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| Taxes or special assessments not shown as liens in the public records | |
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| Additional Coverages | ||
| Vehicular and pedestrian access to and from the land-based upon a legal right | |
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| You are forced to correct or remove an existing violation of certain covenants, conditions or restrictions affecting the property | |
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| Loss of your title resulting from a violation of a covenant, condition or restriction that occurred before you acquired the property | |
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| Up to $10,000 if because of an existing violation of a subdivision law or regulation you are unable to obtain a building permit or must correct or remove the violation (subject to a deductible) | |
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| Up to $25,000 if you are forced to remedy or remove existing structures because any portion was built without obtaining a proper building permit (subject to a deductible) | |
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| Up to $25,000 if you are forced to remedy or remove an existing structure because they violated an existing zoning law or zoning regulation (subject to a deductible) | |
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| Up to $5,000 if you are forced to remove your existing structures because they encroach onto your neighbor's land (subject to a deductible) | |
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| You cannot use the land as a single-family residence because such use violates an existing zoning law or zoning regulation | |
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| You are forced to remove your existing structures because they encroach onto an easement or over a building set-back line | |
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| Your existing structures are damaged because of the exercise of a right to maintain or use any easement affecting the property | |
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| Your existing improvements including lawns, shrubbery or trees are damaged because of the future exercise of a right to use the surface of the Land for the extraction or development of minerals, water or any other substance | |
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| Someone else tries to enforce a discriminatory covenant | |
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| A taxing authority assesses supplemental real estate taxes due to prior construction or change of ownership or use | |
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| Damages if the residence is not located at the address stated in the policy | |
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| Pay costs associated with relocation expenses if you cannot use your home because of a policy claim | |
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| Policy amount increases automatically up to 150% of policy amount over first five years | |
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| Post Policy Coverages | ||
| Someone else claims to have rights to title because of forgery or impersonation | |
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| Someone else has rights affecting title because of leases, contracts or options | |
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| Claims of ownership | |
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| Easements or restrictions that affect your use of the land | |
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| Encroachments of neighbor's buildings onto your land | |