TITLE insurance, explained.
What it actually is
TITLE insurance is a one-time policy paid at closing. It protects against losses caused by defects in the TITLE that existed before you bought the property - the kind of things a search may not catch.
Unlike homeowners insurance (which covers future events), TITLE insurance looks backward. It insures the past.
Owner's policy vs lender's policy
Lender's policy protects the bank up to the loan amount. It is required for every financed purchase.
Owner's policy protects you for the full purchase price for as long as you own the home. It is optional - and it is the one that actually protects your equity.
Skipping the owner's policy to save a few hundred dollars is the single most common mistake we see, especially with cash buyers.
What it covers
- Prior unpaid liens (tax, mechanic, judgment, HOA)
- Recording errors in the chain of TITLE
- Forged or improperly executed deeds
- Undisclosed heirs claiming an ownership interest
- Fraud or impersonation in past transfers
- Boundary disputes tied to past surveys
- Legal defense costs if a covered claim is filed against you
Who pays in Arizona
Arizona custom: the seller pays for the owner's policy, the buyer pays for the lender's policy. Both are negotiable in the contract, but this split holds on the vast majority of transactions.
How much it costs
Premiums in Arizona are filed with the state and tied to purchase price. There are no monthly payments, no renewals, and no deductibles in the way you would think of with auto or health insurance. You pay once at closing and the policy stays in force for the life of your ownership.
Common questions about TITLE insurance
What is TITLE insurance?
TITLE insurance is a one-time policy that protects an owner or a lender from financial loss caused by defects in the property's TITLE - things like undiscovered liens, recording errors, forged deeds, or undisclosed heirs that existed before you bought the home.
Is TITLE insurance required?
Lender's TITLE insurance is required by virtually every mortgage lender. Owner's TITLE insurance is optional but strongly recommended - it is the only policy that protects you, the buyer, rather than the bank.
Who pays for TITLE insurance in Arizona?
By Arizona convention, the seller pays for the owner's policy and the buyer pays for the lender's policy. This can be negotiated in the contract, but the standard split holds in the vast majority of transactions.
What does TITLE insurance cover?
TITLE insurance covers prior liens, recording errors, forged signatures, undisclosed heirs, fraud, encroachments revealed by survey, and the legal defense costs if any of these surface after closing.
How much does TITLE insurance cost?
Premiums are set by the state and based on purchase price. They are paid once at closing and the policy stays in force for as long as you or your heirs own the home. There are no monthly payments or renewals.