In the world of real estate, it’s not very well known that title insurance policies vary significantly from one company to another.
When it comes to basic title protection, though, policy coverage among insurers is very similar. Title insurance typically protects home buyers against loss from risks which are listed in the policy, including another person having an ownership interest in the property, outstanding liens, construction without a permit, fraudulent title dealing, breach of zoning bylaws and other circumstances which could result in loss.
But unlike insurance policies in other fields, some title insurance policies also include coverage for risks that are not specifically itemized.
This type of protection is called legal services coverage and not every title insurer offers it.
In plain language, if a mistake in a real estate transaction occurs due to a lawyer’s negligence, legal services coverage in a title policy protects the owner — even if the mistake falls outside the specific risks listed in the policy.
I often say that there is no such thing as a simple real estate deal. There are numerous aspects of a real-estate transaction in which mistakes can occur, even though the owner has received good and valid title to the property.