Title Insurance is a policy of insurance that provides coverage for the title related risks associated with real estate transactions. It is designed to cover the unpredictable or undetectable issues such as forgery, fraud, missing heirs, etc. that can affect rights of ownership. Because it is insurance, a Title Insurance policy moves the risk associated with title from the home buyer, the lending institution or the lawyer, to the title insurer.
If there is a problem with title that only becomes known after closing, the title insurer may rectify the problem or compensate the Title Insurance policyholder, provided the type of problem that surfaces is covered by the Title Insurance policy.
A Title Insurance policy will contain:
- risks or losses the policy will cover;
- risks or losses the policy will not cover; and
- general terms governing the insurance coverage.
Should a policy holder suffer a loss of title through title/identity theft, the insurance will provide funds to discharge the mortgage or compensate for the loss of the property. Without Title Insurance the home owner is forced to make a claim to the government’s Assurance Fund – a long and expensive process which is not always successful.
Some insurers will provide Title Insurance for clients who already own their home, but did not obtain the protection of Title Insurance when they first purchased their home.
Title Insurance is available in Ontario through at least 4 separate insurers in addition to the old method of solicitor certification. For the most part title insurance provides broader protection at lower costs, and is especially useful in protecting against title fraud.