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The importance of title insurance

Most people in Louisiana long for and plan for the day they can buy their first home. Owning real estate is one of the most important rights and freedoms America has to offer. Property ownership not only enhances self esteem, but also provides a permanent place for a family to live, grow and thrive.

As Louisiana Title Services points out, homeowners want to know that the property belongs to them and them alone. They want to make sure that no one except their mortgage company has any claims, liens or encumbrances against the property. That is what title insurance assures.

Owner title insurance

The Louisiana Department of Insurance explains that there are two types of title insurance in Louisiana: an owner's policy and a lender's policy. An owner's policy protects the homeowner against any ownership or title issue that may arise after purchasing the home. While this type of insurance policy is not required, most homeowners prefer to purchase it because it protects them up to the policy limits, which can be the full purchase price, against any of the following:

  • Financial loss from covered claims against the home's title
  • Legal costs if the insurer must defend against a covered title claim
  • Payment of successful title claims against the home

An owner's policy protects the homeowners for the length of time they own any interest in the house. It does not end when the mortgage is paid off.

Lender title insurance

Most homeowners must borrow money from a mortgage company when they buy a home. The lender usually requires the homeowner to purchase a lender's policy as a condition of granting the mortgage. A lender's policy protects the mortgage company, not the homeowner. It is issued in the amount of the mortgage, coverage decreases as the amount of the mortgage decreases, and the policy ends when the mortgage is paid off.

Homeowners have the right to comparison shop for their insurance provider. They need not buy either type of policy from the suggested company. When shopping, they should ask what services and fees are included in the policy premium. They also should ask if there are any additional fees that are charged separately.

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Lundy Lundy Soileau & South, LLP

Main Office: 501 Broad Street Lake Charles, LA 70601 | Phone: 337-439-0707

Mailing Address: PO Box 3010 Lake Charles, LA 70602 | Fax: 337.439.1029