What Is Title Insurance? Owner's vs. Lender's Policy

Title insurance protects against ownership problems that started before you bought the home, like a past owner's unpaid taxes or a contractor who says they were never paid. There are two kinds. A lender's policy protects the lender and is usually required for a mortgage. An owner's policy protects you, and buying it is your choice.

What does title insurance protect against?

Title is your legal right to own the home. Title insurance protects that right from old problems that show up later.

The CFPB says title insurance can protect you "if someone later sues and says they have a claim against the home from before you purchased it." It gives two examples:

• A previous owner who didn't pay their taxes.
• Contractors who say they were not paid for work done on the home before you bought it.

Before closing, the title company searches public records for problems and works to clear them. The insurance is for problems the search missed.

What is the difference between an owner's and a lender's policy?

They cover different people. Only one covers you.

The "how long" and "cost" rows come from the Texas Department of Insurance's guide. Ask your title company how it works in your state.

Do you need owner's title insurance?

It is optional, but think hard before you skip it. The lender's policy does not protect your money in the home.

The CFPB says most lenders require a lender's policy, "which protects the amount they lend." For yourself, it says you "may want to buy an owner's title insurance policy, which can help protect your financial investment in the home." If a claim hits your home and you have no owner's policy, the problem is yours to deal with.

An owner's policy can help protect what you paid and the equity you build. Ask for the price of both policies on your Loan Estimate, and decide with the numbers in front of you.

Who pays for title insurance?

It depends on your state, local custom and your contract.

• Lender's policy: the buyer usually pays, since the loan requires it.
• Owner's policy: in some areas the seller pays by custom. In others the buyer does. It can be negotiated in the offer.
• Texas: the state sets title rates, and "all Texas companies charge the same rates for title insurance." Other closing fees can still differ. See the Texas guide.

Title insurance is not like homeowners insurance. In Texas, the state's guide says you pay the premium one time, at closing. Homeowners insurance is paid every year.

Can you shop for title insurance?

Usually, yes. The CFPB says you can usually shop for your title insurance provider separately from your mortgage, and shopping could save you money.

• Use one company for both policies. The CFPB says buying both from the same provider usually costs less than buying them separately.
• The seller can't force your choice. Under the Real Estate Settlement Procedures Act (RESPA), a seller may not require you to buy title insurance from a particular company as a condition of the sale.
• Check the numbers. The premium on your Loan Estimate or Closing Disclosure may look different from the title company's paperwork. That does not always mean you are being overcharged. Ask why.

What happens if someone makes a claim on your title?

Call your title company first. Don't try to fight it alone.

The Texas Department of Insurance says: "If there's a challenge to your ownership later, your title company will handle the dispute." Your policy spells out what is covered and how to file a claim.

• Keep your policy with your other important home papers. In Texas, the paper copy can take about 30 days after closing to arrive.
• Read it when it comes, and ask the title company about anything you don't understand.
• Write down the title company's name and policy number where you can find them years from now.

How do you protect your money at closing?

Your title or escrow company often handles the closing money. Scammers know it.

Never trust wiring instructions from an email alone. Call the title company at a number you know is real before you send money. More in earnest money and closing costs for buyers. New to buying? Start with the home buying guide or talk to a local agent.

Quick answers

Is title insurance required?

A lender's policy is usually required to get a mortgage. An owner's policy is optional. Cash buyers can choose whether to buy one.

Is owner's title insurance worth it?

It protects your own money in the home, which the lender's policy does not. Ask for the price of both on your Loan Estimate and decide with the numbers in front of you.

Can the seller make me use their title company?

No. Under RESPA, a seller may not require you to buy title insurance from a particular company as a condition of the sale.

Is title insurance a one-time cost?

Usually, yes. The Texas Department of Insurance, for example, says you pay the premium one time, at closing. Homeowners insurance, by contrast, is paid every year.

What does a title search look for?

It looks for problems in public records, like unpaid taxes, old liens, judgments or errors in past deeds. The title company works to clear them before closing.

Get pre-approved · Read the home buying guide · Talk to a local agent

Sources and further reading

Updated November 14, 2026. We check these sources each time we update this guide. See our editorial policy.

1. CFPB: What is owner's title insurance?
2. CFPB: Can the seller require me to buy title insurance from a particular company?
3. Texas Department of Insurance: What is title insurance?