Owner Title Policies & Surveys Explained
Long Form ("old style") title insurance policies exclude coverage for matters of survey, unless a current survey is performed and incorporated into the terms of the policy. Practical example of a Long Form Owner Policy–
Assume, for example, a house sits on a lot in a subdivision and someone buys the property. At closing, an owner's policy is purchased without the benefit of a current survey. If it is later determined that the house actually sits on the adjacent lot, the homebuyer would not have a valid claim under the policy because of the survey exception.
On the other hand, what if the homebuyer did have a survey performed prior to closing? In this case, coverage would depend on what the survey revealed. If the survey correctly revealed that the house was located on the adjacent lot, there would still be no coverage, since the title policy would insure only matters undisclosed by the survey. And this would have been evidence prior to the conclusion of the closing.
However, if the survey erroneously depicted that the house existed on the lot being purchased, then the homebuyer would have full coverage up to the limit of the policy, since the defect was a matter not disclosed by the survey.
That's the importance of a survey!