# What Every Escrow and Title Company Needs to Know About Title Insurance
If you’re involved in the real estate industry, then you’re probably familiar with the concept of title insurance. However, do you know what it is, why it’s important, and how it works? In this blog post, we’ll dive into the basics of title insurance and explain what every escrow and title company needs to know about it.
## What is Title Insurance?
Title insurance is a type of insurance policy that protects property owners and lenders from financial loss due to defects in a property’s title. These defects can include errors or omissions in public records, undisclosed liens or encumbrances on the property, and even fraud or forgery.
## Why is Title Insurance Important?
Title insurance is important because it provides an extra layer of protection for property owners and lenders. Without title insurance, a property owner or lender could potentially be held responsible for any defects in the title, which could result in costly legal disputes and financial losses.
## How Does Title Insurance Work?
Title insurance works by providing coverage for any defects in a property’s title that existed prior to the policy being issued. Unlike other types of insurance policies, title insurance only covers events that occurred in the past, not events that may happen in the future.
When a property is being sold, the title company will conduct a thorough search of public records to identify any potential defects in the title. If any defects are found, the title company will work to resolve them before the sale is completed. Once the sale is completed, the buyer and/or lender will receive a title insurance policy that provides coverage for any defects that were not discovered during the search process.
## How Much Does Title Insurance Cost?
The cost of title insurance varies depending on a number of factors, including the location of the property, the value of the property, and the amount of coverage being provided. In general, title insurance premiums are a one-time cost that is paid at the time of closing.
## Conclusion
Title insurance is an important and often overlooked aspect of the real estate industry. Understanding what it is, why it’s important, and how it works can help escrow and title companies provide better service to their clients and ensure that all parties involved in a real estate transaction are protected from potential financial losses due to defects in a property’s title.
