Title Insurance insures that you will be the title owner of the property and that no one will come forward with a better claim to the property than the claim that you have. 

Why is there Owner’s Title & Lender’s Title?

Lender’s Title Insurance protects the lender’s interest in the property to the extent of the loan amount.  Lenders always require title insurance, it is not optional.  As the loan is paid down, the amount of the coverage under the Lender’s Title Insurance decreases accordingly and when the loan is paid off, the Lender’s Title Insurance policy terminates. 

Owner’s Title Insurance protects the owner’s title to the property.  So, money the owner pays down on the property at the time it is purchased (the down payment), and equity that the owner earns over the course of the years either by paying down the loan, making improvements to the property, or increases in market value are covered.  Owner’s Title Insurance is “optional” but I would never buy a property without it!

Why Should I get Owner’s Title Insurance?

Title issues occur more often than one might think.  There was a survey taken in Georgia several years ago that determined 1 in 3 titles in Georgia have a problem and, in reality, that bears out with what we see in our practice. 

There are two types of Owner’s Title Insurance policies: Standard and Enhanced. 

The major benefits of an enhanced policy over a standard policy include:

  • A standard policy only covers up to the sales price of the property, whereas an enhanced policy covers 150% of the sales price.  This means that future increases in the value of the property are covered up to that amount.;

  • A standard policy only covers issues that were caused by circumstances that arose prior to the purchase of the property, whereas an enhanced policy covers circumstances that arise after the purchase of the property.  For example, let’s suppose that a couple of years after you purchase the property a neighbor builds a fence that encroaches on your property, you don’t realize it, and then five years later you go to sell the property and the buyer does a survey and finds the encroachment … under a standard policy this would not be covered, but with the enhanced policy. you are covered; and

  • A standard policy does not cover matters that would be shown on a survey of the property but an enhanced policy does.  In the past, surveys were always required and done when real estate was sold or encumbered.  Approximately two decades ago that stopped being a requirement and, today, surveys are rarely performed prior to the purchase. 

So, whereas in the past, title issues associated with encroachments or boundary line disputes were identified at the time of the sale, today, that is not the case and you may have a title issue of this sort without even knowing it.  If and when this issue rears it’s ugly head, if you don’t have title insurance or only have a standard policy, it will be your money and your problem to fix it (if it even can be fixed).  If you have an enhanced policy, you are covered and your equity preserved.

Provided by Eric Slepian of Slepian & Schwartz in Peachtree City
(770) 486-1220, ericslepian@slepianfirm.com

Another Opinion…WHY YOU WANT TITLE INSURANCE

John Kimbell of Edge & Kimbell Law, LLC, (678) 962-0050
Homeowners often ask this question. Your home is most likely the largest purchase you’ll ever make and title insurance plays a key role in protecting your investment. A detailed title search is conducted after you sign the sales contract to purchase your home. The title search involves examining the land records pertaining to your property over the last 50 years. Though this is a detailed and thorough examination, there are many hidden issues that may not be uncovered by this process. For example, forgeries on original documents, missing heirs, improper deeds and ex-spouses are very difficult to detect in the title search. Title insurance protects you against these hidden risks.

One of the most common types of title issues is unreleased liens on the property. Even if the lien does not belong to you, since it is filed on the property, it becomes “attached” and must be cleared. Approximately one-third of all properties have some type of title issue or defect. An owner’s title insurance policy offers full protection against title defects as well as peace of mind to the homeowner.

It is important to understand the difference between the two types of title insurance policies, a lender’s policy and an owner’s policy. Your lender will require you to purchase a lender’s policy to protect their investment in your property. The lender’s policy is usually based on the amount of your loan, exists only over the life of the loan and protects the lender if a problem arises with the title.

Since the lender requires you to purchase a lender’s policy, you may be wondering why it’s strongly recommended to also purchase an owner’s policy. While the lender’s policy covers their interest in your property, it does not protect the homeowner at all. Consequently, if a title issue arises and you do not have an owner’s title insurance policy, you could be faced with large legal expenses to defend yourself against claims made on your property. With an owner’s policy, you can rest assured that the title company will pay valid claims and cover your legal expenses should a title issue arise against your property.

The owner’s policy is purchased for a one-time fee at closing and is based on the sales price. Unlike the lender’s policy which is effective only for the life of the loan, an owner’s policy covers the homeowner for as long as they or their heirs own the property.

If you refinance your home, the lender will require you to purchase a new lender’s policy since you are obtaining a new loan. The lender wants to be protected in case any claims have arisen since you originally purchased the property. You do not have to purchase a new owner’s policy since the original policy is in effect as long as you still own the property. You also may be entitled to a reissue rate, or discount, on the new lender’s policy if you have an owner’s policy that is less than ten years old. RSI Title always applies the reissue rate discount to both refinances and purchases when available.

HOI is required if you will have a mortgage.  You can choose anyone you like.  Should you not have a contact and would like a referral, we would be happy to suggest a trusted carrier.

What Factors determine the Price

Factors Within Your Control

  • Most carriers use an ‘insurance score’ to determine your premium.  The insurance score is determined by looking at many variables on your credit report including:  the number of open accounts; amount of credit available to you; number of late payments; and length that you have held your accounts.

  • Deductible:  This is the amount you will pay in the event of a covered loss prior to the insurance company making payment.  Deductible choices to consumers have grown over the past few years, and some consumers are choosing deductibles as high as $5000 to lower their annual homeowner’s insurance cost.

  • Previous claims history:  If you have filed numerous claims on a renter’s or homeowner’s insurance policy in the past three years, your homeowner’s insurance premium is likely to be much higher.  Always call your agent to discuss a loss prior to filing a claim.  Your agent’s advice is valuable as you decide how to move forward in the event of a loss.

  • Prior insurance history:  Are you currently renting a home or apartment?  Do you have a renter’s insurance policy?  If so, you are likely to receive a discount when you purchase a homeowner’s insurance policy.

  • Characteristics of the home:

    • Age of home.  Typically, newer the home, the lower your premium.

    • Age of roof.  Some carriers now limit the coverage on older roofs.

    • Material home is constructed?

    • Do you have security features such as an alarm system, dead bolt locks, and fire extinguishers?  These features should lower your premium.

  • Type of coverage:

    • Replacement cost or actual cash value insurance policy?

    • If you have a mortgage, you will need replacement cost policies will pay the amount to repair or rebuild your home, even if it exceeds the stated dwelling coverage on your policy, up to a specified percentage.  An actual cash value policy only pays the value of the damaged property at the time of the loss, regardless of the cost of repairing or rebuilding the property.  In other words, your insurance payment with an actual cash value policy considers depreciation.

  • Multiple policies with one company:

    • Do you insure your vehicles with the same company that will insure your home?  The majority of insurance companies will provide a multiple policy discount when you insure more than one item with that company.  Often, the savings is substantial.  Be certain to inquire about a multiple policy discount when searching for a homeowner’s insurance company.

Factors Out of Your Control

  • The Insurance Services Office (ISO) rating of the fire department that services your residence.  The ISO is an independent company that rates every community in the United States for fire and emergency readiness. The ISO rating is then used to determine the insurance rates for the community that the fire department services. The communities are rated on items like manpower, equipment and water supply.  The ratings range from what is referred to as a Town Class 1 to a Town Class 10, with 1 being the best rated fire departments.  If the fire department servicing your residence has a lower ISO Town Class, your homeowner’s insurance premium will be lower as well.

  • The distance of your home to the fire hydrant and fire station.

While the cost is important, the advice and service you receive from a reputable agent can be invaluable.  Understanding your homeowner’s insurance coverages and being confident these coverages meet your needs should be the primary concern when purchasing a policy.  Find an agent that can explain your options and help you make the best choice for your needs.  Purchasing a policy that does not adequately protect your contents or provide the right amount of liability coverage will do you no good in the event of a loss.  Agencies that offer annual policy reviews; accessibility when you have a potential claim; and service when you need to make a change will make your insurance experience not only more pleasant, but a better value in the long run. 

Provided by Dianne Parker of Allstate, 770-251-7176, 45A Sutherland Drive, Newnan, Ga 30263

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Policies include 6-Types of Protection

John Thompson Agency. 770-757-1375 / john.thompson@allstate.com.  Call us for more details on any aspect of these and to make sure you are properly protected.

DWELLING COVERAGE

Dwelling coverage is what comes immediately to mind when someone says 'home insurance.' It protects the structure of your house against covered perils such as fire, wind, lightning, and hail. You should have enough dwelling coverage to rebuild your house from the ground up should it be destroyed by a covered event. One caution: Separate policies are needed for flood and earthquake coverage

OTHER STRUCTURES COVERAGE

Other Structures protection is exactly what you might think. It protects sheds, detached garages, and fences from covered events. Typically, coverage limits are set at 10% of the amount of dwelling coverage, but you can purchase more protection if necessary

PERSONAL PROPERTY PROTECTION

Personal Property coverage protects your possessions in case they're stolen or destroyed by a covered peril. Electronics, clothing, and furniture are among the items in this category. Limits typically are set at between 50% and 70% of your dwelling coverage limit. However, coverage is often limited for certain high-value items such as jewelry or furs – these can be covered fully by scheduling an endorsement to your policy

PERSONAL LIABILITY PROTECTION

Personal Liability protection helps if someone sues after being hurt on your property or suffering property damage because of an event caused by your or a member of your household. It can pay for your legal defense and for any settlement or award in the lawsuit, up to your coverage limits. You also can be protected from injuries caused by your pets. The coverage limit typically is set at $100,000, but you can purchase additional coverage

LOSS OF USE COVERAGE

Loss of Use coverage kicks in if your house becomes uninhabitable because of a covered event. While it's being repaired or replaced, this coverage helps with your living expenses, including hotel and restaurant bills. Limits typically are set at 20% of your dwelling coverage limit; however, sometimes policies include time limits as well

MEDICAL PAYMENTS COVERAGE

Medical Payments coverage helps if you're responsible for the injuries of someone who does not want to sue. It can pay medical expenses up to your coverage limit. That limit typically is set at $1,000, but you can purchase additional coverage.

Do I Need Flood Insurance?

  • Floods are the nation’s most common and costly natural disaster and cause millions of dollars in damage every year.

  • Homeowners and renters insurance does not typically cover flood damage.

  • Floods can happen anywhere--More than 20 percent of flood claims come from properties outside the high risk flood zone.

  • Flood insurance can pay regardless of whether or not there is a Presidential Disaster Declaration.

  • Most federal disaster assistance comes in the form of low-interest disaster loans from U.S. Small Business Administration (SBA) and you have to pay them back. FEMA offers disaster grants that don't need to be paid back, but this amount is often much less than what is needed to recover. A claim against your flood insurance policy could and often does, provide more funds for recovery than those you could qualify for from FEMA or the SBA--and you don't have to pay it back.

  • You may be required to have Flood insurance.  Congress has mandated federally regulated or insured lenders to require flood insurance on mortgaged properties that are located in areas at high risk of flooding. But even if your property is not in a high risk flood area, your mortgage lender may still require you to have flood insurance.

  • Flood insurance helps more: Check out your state's flood history with FEMA's interactive data visualization tool, check the FEMA website.  Roll your cursor over each county to see how many flooding events have happened. The tool allows you to compare how much FEMA and the U.S. Small Business Administration have provided in terms of federal disaster aid after a Presidential Disaster Declaration to the amount the National Flood Insurance program has paid to its policyholders. It's easy to see that having flood insurance provides a lot more help for recovery.

What You need to know when buying Flood Insurance

  • Ask your agent the right questions.

  • Know what is and is not covered. Contents are not covered by a building/structure flood policy. You'll need another policy for contents within the building.

  • There is typically a 30 day wait period between when you buy a flood insurance policy and when it goes into effect, but there are some exceptions.

  • There is a congressionally-mandated surcharge added to all National Flood Insurance Program policies.

If you need more information or help with securing a Flood Policy, please contact The Thompson Agency Group, John Thompson @ 770.502.2227 or john.thompson@allstate.com