What is a title insurance premium?

A title insurance premium refers to the one-time fee paid for a title insurance policy. This policy serves to protect the buyer and the lender from potential losses due to defects in the title, such as liens, encumbrances, or other issues that could affect ownership of the property. When a buyer purchases a property, they pay this premium upfront, which covers the costs associated with underwriting the insurance and performing necessary title searches to ensure that the property's title is clear.

Understanding the nature of the title insurance premium is crucial for prospective property buyers, as it is not a recurring charge, but rather a single payment that provides lifetime protection against various title-related risks. It differentiates itself from ongoing payments like monthly insurance premiums or taxes associated with property ownership. Thus, this concept is fundamental in real estate transactions, ensuring that buyers are well-informed about their financial obligations regarding title insurance.