Title insurance is not a new product. In fact, it has been available to property owners and purchasers for many years in the United States. It has also been available in Canada for several years.
Title insurance can be described as insurance covering an insured’s interest in a specific property against loss resulting from one or more specified causes up to the stipulated policy coverage amount. It should be noted that Title Insurance is different from Property Insurance. Property Insurance provides coverage against the risk of physical damage to the property caused under specific events. Title Insurance on the other hand, provides coverage against certain specified risks or losses relating to your title to the property.
Under a Title Insurance policy, the insured would file a claim against the insurance company if loss occurs from a risk which is covered under the policy. If one does not have title insurance, then a claim would be made against the lawyer who provided the opinion on title (ie. acted for the owner in purchasing the home).
What does title insurance cover? The title insurance policy itself is a contract, which is drafted by the insurance company. The policy will necessarily contain:
* a list of risks or losses the policy will cover;
* a list of risks or losses the policy will not cover; and,
* provide for the availability of extra protection or coverage against additional risks or losses beyond the basic coverage. The additional risks or losses to be covered must be specified at the time of acquiring the insurance policy and will likely increase the cost of the insurance.
Typical types of risks or losses that an owner’s policy may cover include the following:
* the owner having a good and proper title to the property (in other words, the owner has received ownership of the property from a clear chain of transfers in ownership over the years);
* any defects in the title which did not exist at the time of acquiring title insurance such a lien registered on title to the property. Note, if any known defects exist at the time of acquiring title insurance, such defects must be indicated on the policy and coverage may be qualified regarding such defects;
* right of access to and from the land; and,
* the costs of defending or remedying a title problem (only if the policy covers the particular risk or loss).
It should be kept in mind that title insurance is an insurance contract with carefully drafted terms and definitions. If a term of the contract is not satisfied, then coverage may be denied in the event of a loss being suffered by the insured. Finally, title insurance policies (similar to other insurance contracts) can contain exceptions, exclusions, property-specific exclusions and so on. I recommend reviewing your policy to ensure what risks or losses are covered, and, under what circumstances or criteria coverage will be offered.
Whether or not title insurance is something you need is an individual decision given your particular circumstances. The subject should be discussed with your lawyer. Best of Luck!
Victor Hussein is a Kitchener Waterloo lawyer specializing in real estate law.