Christopher K. Caswell Real Estate Law Blog on Lawyers.com

When
purchasing property in the United
States it is important to purchase Title
Insurance.  Purchasing property is an
investment and title insurance protects that investment. When it
comes to chains of title, forged signatures, improperly executed or recorded
documents and other title problems, the title insurance commitment and policy
will alert you to any defects and establish the necessary solutions, or if
necessary, compensate you for damages.

The cost of title insurance is based on the purchase price
of the property or fair market value in the event of a refinance.  In Florida,
the rates title companies can charge are promulgated rates (fixed) and are set
by the state.  Title insurance is paid as
a one time charge on the closing statement.

There are two types of title insurance policies, an Owners
Policy and a Loan Policy.  As you can
surmise by their titles, the Owner's Policy protects the owner and the Loan
Policy protects the lender. 
Institutional lenders in the U.S. usually will not make a loan
on real property without a title insurance policy in place protecting their
interest.

One of the marked advantages of title insurance is that
prior to a policy being issued, the title insurance company completes extensive
research (in most cases going back a minimum of 30 years) into relevant public
records, maps and documents to trace ownership of the property and determine if
anyone other than you has an interest in the property. Through its research,
the title insurance company can usually identify any title problems that may
arise and have these problems cleared-up prior to closing.

Some of the documents that are searched are deeds,
mortgages, liens, judgments, probate documents and notices of commencement just
to name a few. These documents are examined to be sure they have been drafted
and executed properly.

The search and exam is just one part of what title insurance
covers.  Typically your title insurance
will protect you from financial loss:

• If someone contests your title in legal action
  (the title insurance company will defend the title at no expense to you, or
• If there is a title defect that cannot be
  eliminated (the title insurance company will protect you from financial loss up
  to the amount of the policy).               &# 160;