Title Insurance vs House Insurance: Do you need both?

Let’s tackle one of the most common questions when it comes to the home buying process: title insurance vs. homeowners insurance. If you’re in the midst of the home buying process, you’re definitely going to encounter these two terms. Both are crucial to the home buying process – but what exactly are these terms, and when it comes to your real estate transaction, will you need to purchase both kinds?

LemonBrew is here to help! In this blog, we’re going to break down exactly what title insurance is, exactly what homeowners insurance is, and answer the question of whether you need both of them when it comes to your transaction! Ready to learn? Let’s go exploring!

What is Title Insurance?

Let’s go ahead and tackle the first part of the question right here: what is title insurance?

Title insurance is something that every homeowner has to deal with when they’re looking to purchase a piece of property. To understand title insurance, it helps to step back a little and look at the big picture. When you purchase a home or a piece of property, you are (usually) only the latest in a series of owners for the property. For older houses, that chain of ownership might go back for generations or longer.

Over that generational chain, there is a whole lot of paperwork and a whole lot of technicalities to get sorted through when it comes to the homeownership process. So much so, in fact, that one of the first things that must get done when it comes to homeownership is having a title company pick through that very long chain of ownership. They’ll sift through all of the documentation to make sure that the party selling the property actually has the rights to, you know, sell you the property.

It sounds like it should be a very cut-and-dry process – but the truth is, it’s oftentimes anything but. There could be issues with the boundary lines. Bankruptcies could dot the history of prior owners, making the property actually owned by a different party. There could be forged documents as part of the chain, or problems with existing liens or debts on the property.

There are plenty of other problems that could pop up in a title search (you should take a look at this LemonBrew blog for a deeper dive into some of the more common issues in a property title search). So, with all of those issues that could come up – what happens if the title company flat-out misses something?

That’s where title insurance comes in. With title insurance for your property (either as the owner of the property or with the company that issued the mortgage), you get the protection that ensures you actually have rights to the property you have purchased. It again, sounds tremendously basic, but it’s very important. Without title insurance, someone could very well make a claim that they actually own the home that you’re living in. In that case, you could suffer a tremendous financial loss – and be out a home.

What is Homeowners Insurance?

So, let’s tackle the second part of this question: what is homeowners insurance?

Homeowners insurance is the catch-all piece of protection your house needs in case something bad happens to it. This encompasses a massive list of accidents and natural disasters that could happen to the home. If your home has a fire, gets struck by lightning, gets damaged by hail, suffers an explosion, or has a tree fall on it during a storm, you should be covered under a homeowner’s insurance policy.

Think of all the catastrophic events that could happen to your home – we know it’s a bit morbid, but in this case, it’s necessary. That all gets covered with homeowners insurance. Additionally, homeowners insurance (in most cases) also extends to liability within your home – meaning that if someone gets injured on your property, the homeowners insurance will cover any payments that might ensue.

However, there is an essential caveat to homeowners insurance that – depending on where you live – might be very important for your future. If you live in an area on a fault line or in a place that suffers from earthquakes on a regular basis, it’s very important to check the fine print on your homeowners insurance. Not all homeowners insurance extends the coverage to include earthquake damage. The same goes for those that live in an area plagued by floods (this is very important to check when you go through the homeownership discovery process). Not all homeowners insurance policies cover flood damage – which could be a serious problem for those in homes on a flood plain. Be sure to check your policy over carefully before you sign on the dotted line.

Title Insurance vs Homeowners Insurance – Do You Need Both?

So now we come to the big final question: title insurance vs homeowners insurance. Do you need both?

The simple answer? Yes, you do. Having title insurance and homeowners insurance is not only a good idea for your financial and personal future, it may be a requirement as part of the homeownership process.

When it comes to title insurance, you generally won’t have a choice whether you want it or not. Title insurance is a requirement as part of the homeownership process; the mortgage lender will require it as part of the deal in order to protect their investment (and yours). There’s no getting around title insurance in most cases (also – take a look at this article for a look at how to save money on your title insurance costs)

As far as homeowners insurance goes, getting it is just a very good idea for your safety and security for the future. You don’t ever want to think that the worst could happen in your life – but, it’s always best to be prepared for the worst. That’s what homeowner’s insurance gives you: the assurance that your family gets the financial protection they need in case the worst happens.

How LemonBrew Can Help

Looking for guidance when it comes to title insurance for your home? Check out LemonBrew Abstract – with innovative title and escrow services that makes the homeownership title insurance process a breeze!

Another benefit with LemonBrew: match with a LemonBrew Partner Agent to get the real estate process started – and help guide you through everything related to the transaction (including title insurance and homeowners insurance).

Finally – check out our engaging and comprehensive LemonBrew blog, with a vast library of real estate articles to explore. Discover articles including “What are Title Fees? Things Home Buyers Should Know,” “Five Ways to Save Money on Title Insurance,” and “The 10 Most Common Problems Found in a Property Title Search.”