Why title insurance is the cheapest line on your settlement statement

A search and a policy are two different products

When we open your file we examine the public record: deeds, plats, judgments, mortgages, tax records, and the chain of ownership going back decades. That examination catches most problems, and we clear them before closing. What it cannot catch is anything the record does not show: a forged signature three owners ago, a deed signed by someone without capacity, an heir nobody knew existed, a survey error, or a lien recorded in the wrong index. The search protects you against known defects. The policy protects you against unknown ones.

The lender's policy does not protect you

If you are financing, your lender will require a loan policy. That policy insures the lender's interest, in the amount of the loan, and its coverage shrinks as you pay the note down. If a title claim wipes out ownership, the loan policy pays your lender, not you, and not your equity. The owner's policy is the separate line item that covers you, and it is the one buyers are most often tempted to decline.

What it actually costs

In Virginia, title insurance is a one-time premium paid at closing, priced per thousand dollars of coverage and filed by the underwriter. When an owner's and a lender's policy are issued simultaneously, the combined cost is far less than the two purchased separately. On a typical Hampton Roads purchase, the owner's coverage is a small fraction of what you will pay that day in lender fees, taxes, and prepaid escrows, and unlike homeowner's insurance, there is no annual renewal. You pay once and the coverage lasts as long as you hold title.

Enhanced coverage is worth asking about

Most underwriters offer an enhanced or extended owner's policy for a modest increase in premium. Depending on the form, it can add coverage for things standard policies exclude: certain post-policy forgeries, building permit violations by a prior owner, subdivision and zoning issues, and automatic increases in the policy amount as property values rise. Ask us before closing which form makes sense for the property. On new construction and recently subdivided lots, the difference matters.

Claims we actually see in Hampton Roads

Estates in the chain of title where the property passed without a qualified administrator. Divorce decrees that awarded the house but were never followed by a deed. Contractors' liens filed after a flip. Old equity lines the seller believed were closed but which were never released. Boundary and easement conflicts on waterfront and canal lots, where a bulkhead or dock sits partly on a neighbor's line. Each of these has killed or delayed a closing here, and each is the reason both the search and the policy exist.

The practical takeaway

Ask your settlement attorney three questions before closing: what exceptions appear in Schedule B of my commitment, do I have an owner's policy and for what amount, and is the enhanced form available on this property. If you are working with us, you will have the commitment in hand with time to ask them. If you are not, ask anyway. The answers should never be a surprise at the table.