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Title insurance is indemnity insurance that protects the titleholder from financial loss caused by a defective title to land or property. The title insurance policy, in essence, protects mortgage lenders and property buyers. If title disputes arise during the sale transaction, the title insurance company will be liable for any financial losses and legal fees incurred. For more details about insurance, you can also check the title insurance premium calculator

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Coverage offered under a title insurance

For a one-time premium, the title insurance policy provides coverage for the following:

  • Title defects that prevent one from having ‘clean’ ownership of the property

  • Existing lawsuits or liens on the property’s title

  • Forgery of documents and fraud related to the title

  • Errors in public records and surveys

  • Encroachment issues

Types of title insurance

Both commercial and residential property can benefit from title insurance. There are two kinds of title insurance policies:

Lender's title insurance: The lender's title insurance is purchased by the lender (such as banks and financial institutions) to provide financial protection against any losses that may occur as a result of a title-related issue with the property.

Owner's title insurance: The owner of the property purchases owner's title insurance to protect against financial losses that may occur as a result of an invalid property mortgage.

When a property is sold, the title is changed as well. Issues with the title may arise at any time during the transmission process. Defective titles can result in financial losses for all parties involved. 

Types of Title Insurance in New Jersey