One of the most important decisions you will make at closing is whether or not you purchase an owner's title insurance policy. If you are borrowing money from an institutional lender, the lender will require that you purchase a lender’s title insurance policy naming your lender as the insured. Additionally, you will be offered the opportunity to purchase an insurance policy known as an owner's title policy that names you as the insured. The lenders' title insurance policy will not protect you since this policy only comes into play if the lender has foreclosed on the property.

Owner’s title insurance will insure you against problems affecting the title to your property. For example: a forged signature on a deed; errors made in recording a deed or mortgage; a deed signed by a person determined to be incompetent; a defective foreclosure; an undiscovered heir who unexpectedly re-appears; an ex-spouse who claims that a divorce was improperly settled; or unpaid liens or judgments. Although title losses occur infrequently, they do occur and may be very expensive if you are not insured.