Owner's Title Insurance vs. Lender's Title Insurance: What's the Difference?

When buying a home, one of the typical expenses incurred by a homebuyer (and sometimes, a home seller) is for the purchase of title insurance. The homeowner typically obtains title insurance coverage for him/herself and, if the purchase is being financed, title insurance coverage for the motrtgage lender is also obtained.

For a basic primer on the difference between an owner's title insurance policy and a lender's title insurance policy, see Knowing your owner's title insurance from your lender's, published in a column in DC Chronicles.

Editor's Note:

In addition to being obligated to defend the insured property owner's (and/or mortgage lender's) interest in real estate (and indemnify the insured in the event of a loss) in the event there is an adverse claim against a previous owner of the subject property, a title insurance company is also obligated to foot the bill for the defense of the property title (legal fees, court costs, etc.).

For an example of how a buyer can screw himself over when purchasing real estate and tries to save on the cost of the insurance premium by not obtaining title insurance, see Clerk's error jeopardizes family's home (Undetected lien against seller haunts buyer) (In this case, not only is the homeowner on his own in defending against an adverse claim against the prior owner, but he has already shelled out about $10,000 of his own money in legal bills defending his title - money which, win or lose, he will never recover).