ABA Family Legal Guide

Home Ownership

Property Rights and Restrictions

Safeguarding Property Rights: Title Insurance

What's the difference between an owner's policy and a mortgagee policy?

The owner's title insurance policy covers losses or damages you suffer if the property really belongs to someone else, if there is a defect or encumbrance on the title, if the title is unmarketable, or if there is no access to the land. The latter could occur, for example, if you would have to cross a private road to get to your house and the owner of the road refuses permission.

The lender's mortgagee title insurance policy includes all four of these protections. But it protects only the lender. Particularly important policy clauses for the lender are the ones that cover losses the lender would suffer if another creditor were first in line.

Owners' policies are more expensive. If the same insurer issues both, the concurrent mortgagee policy will probably cost far less--in part because the insurer doesn't have to search the records twice. The limit of the owner's policy is typically the market value of the house at the time of the purchase, while the mortgagee policy is for the amount of the mortgage. The premium is based on the amount of coverage and may vary greatly by state.