What Title Insurance Covers: The Full List

Forged or fraudulent deeds: if a deed in the chain of title was forged — by a previous seller, a fraudulent "owner," or a scammer posing as the legitimate owner — and someone with a legitimate claim challenges your ownership, title insurance covers your legal defense and potential loss. Undisclosed or unknown heirs: when a property is sold from an estate, it is possible that a legitimate heir was missed in the estate proceedings and later comes forward with a claim. Title insurance covers this scenario. Unreleased mortgage liens: a prior owner paid off their mortgage, but the lender never recorded the satisfaction/release in the public records. The prior lien shows in the chain of title. Title insurance covers the cost of clearing this and any losses if the lien holder asserts a claim. Mechanic's and contractor liens: a contractor did work on the property and was not paid by the prior owner. They file a lien after your purchase (mechanic's lien laws give them a window of time after completion to file). Title insurance covers this. Recording errors: clerical mistakes in the public records (wrong parcel number, incorrect legal description, transposed names) that cloud the title. Boundary and easement disputes: a survey reveals the fence has been encroaching on a neighbor's land for years, or an undisclosed easement runs through the property. Title insurance covers certain boundary and easement issues not revealed in the title search.

What Title Insurance Does NOT Cover

Known defects that were disclosed before closing: if a title defect was identified during the title search and disclosed to you before closing, you accepted the risk knowingly. Known defects are excluded. Future matters: title insurance covers past events only. It does not cover future easements, future liens created by your actions, future zoning changes, or future environmental problems. Zoning and land use restrictions: standard title insurance does not cover losses arising from governmental regulation of land use (zoning, building codes, environmental restrictions). Some enhanced policies add limited coverage in this area. Physical condition defects: title insurance covers legal defects in ownership, not physical defects in the property itself (leaky roof, faulty foundation, mold). These are covered by the home inspection process and negotiation. HOA-related issues: basic title policies may not cover all HOA disputes. If an HOA has an unpaid assessment or pending special assessment that was not disclosed or discovered, coverage may be limited depending on the policy language.

Enhanced vs Standard Title Insurance

Title insurance is available in two versions in most markets: Standard (ALTA) policy: covers the basic covered risks: forgery, fraud, undisclosed liens, recording errors, and boundary disputes based on the public record. The most common and least expensive form. Enhanced policy: adds additional coverages not in the standard policy, which may include: post-policy forgery protection, building permit violations, encroachments, and in some versions limited coverage for zoning issues. Enhanced policies typically cost $200–$600 more than standard. For most residential purchases, the standard ALTA policy provides adequate coverage. Enhanced policies are most valuable for properties with known complexity (unusual locations, older chain of title, development history).

“The title insurance coverage that most surprises buyers when they hear about it is the forgery and identity fraud protection. Real property title fraud — where someone forges a deed to "sell" property they don't own, often targeting free-and-clear properties of elderly or absent owners — is an increasing phenomenon. Without an owner's title insurance policy, a buyer who purchased from a fraudulent seller has no legal protection other than pursuing the fraudster, who is often untraceable. Title insurance makes the buyer whole regardless of whether the fraudster is caught.”

— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®

• Title Insurance Guide (Hub)
• Owner vs Lender Title Insurance
• How Much Does Title Insurance Cost?
• Do I Need Title Insurance?
• Title Search Explained
• Common Title Defects

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