There are generally two types of title insurance policies that come into play during a home purchase. They include:A lender's title insurance policy, also known as "loan insurance." A lender's insurance policy is designed to protect the mortgage lender by shielding it in the event of alleged title defects and disputes between buyer and seller that could lead to financial losses. Mortgage lenders typically require the homebuyer to purchase lender's title insurance. The fees are added to the buyer's mortgage closing costs. Lender's insurance policies remain in effect for as long as it takes you to pay off the loan in full. They also terminate if you sell the home.
A homeowner's insurance policy, also known as "owner's insurance." A homeowner's title insurance policy is designed to protect the homebuyer if a claim is made against the title to the property after the property changes hands. In most home purchase transactions, the mortgage lender requires the purchaser to secure homeowner's title insurance as part of the closing costs. Owner's insurance policies remain in effect as long as you own your home. In the majority of cases, the homebuyer will purchase the owner's title insurance themselves. However, in some situations, the seller will pay for the homeowner's title insurance, either as a condition of the agreement of sale or as a sign of good faith.