There are two types of title insurance:
■ Lender insurance protects the lender against any loss that might occur due to unknown title defects. It also guarantees the lender to have a valid first lien against the property.
■ Owner insurance protects the buyer from issues that might emerge after the close of sale. Issues may include human error, unpaid liens, forged documents, undisclosed or missing heirs and incorrect legal descriptions. Only an owner’s policy will protect the owner from personal loss, such as legal expenses for a dispute after the sale.
There are no annual premiums with owner insurance. The premium for title insurance is paid when the policy is issued at closing. The policies insure the property owner for as long as the property is owned, and potentially after the property is sold again. Protection is limited to the face amount of the policy, which is usually the market value of the property when it is purchased. Depending on the type of policy issued, the policy may not cover increases in value.
Note. The Georgia Association of Realtors' Purchase and Sale Agreement (2014 revision) lowered the deed quality required by sellers from "Warranty" to "Limited Warranty." While this quality of title change may reduce a buyer's legal recourse against his seller, title insurance coverage is unaffected by this change.