When buying a home, you’re likely to hear the term title insurance more than once—but what many buyers don’t realize is that there are two different types of title insurance: Lender’s Title Insurance and Owner’s Title Insurance.

Each plays a unique role in protecting different interests in the real estate transaction. Knowing the difference can help you make informed decisions—and avoid costly surprises down the road.

What Is Title Insurance?

Title insurance protects against past issues with a property’s title that could affect ownership, such as:

• Unpaid liens

• Ownership disputes

• Clerical errors

• Fraud or forgery

• Easements or restrictions not disclosed

Unlike most insurance policies that protect against future events, title insurance covers issues that already exist, even if they haven’t yet surfaced.

What Is Lender’s Title Insurance?

Lender’s title insurance, also known as a loan policy, is usually required by your mortgage lender. It protects the lender’s financial interest in the property if a title issue arises.

Key Facts:

• Who it protects: The lender (not the buyer)

• How long it lasts: Until the mortgage is paid off

• Who pays for it: Typically the buyer (depending on local customs or contract negotiation)

• Why it matters: It ensures the lender is first in line to be repaid if ownership is challenged

Even if you’re paying for it, lender’s title insurance does not protect you as the homeowner. That’s why owner’s title insurance exists.

What Is Owner’s Title Insurance?

Owner’s title insurance, or an owner’s policy, protects you, the homebuyer. It provides coverage if someone challenges your ownership or a hidden title defect emerges after the purchase.

Key Facts:

• Who it protects: You, the homeowner

• How long it lasts: For as long as you or your heirs own the property

• Who pays for it: Usually the buyer, though in some markets the seller may pay

• Why it matters: It covers legal fees, losses, and settlement costs if your ownership is ever challenged

Without an owner’s policy, you could be left to fight title issues—and pay for the consequences—on your own.

Why You Need Both

Many buyers assume that because they’re buying title insurance for the lender, they’re automatically covered. Unfortunately, that’s not the case.

Here’s a quick comparison:

In short: lender’s insurance protects their money. Owner’s insurance protects your home.

Real-World Example

Imagine you buy a home, and six months later, someone claims they are a rightful heir to the property. They file a lawsuit to take ownership. Without owner’s title insurance, you would be responsible for hiring a lawyer, defending the claim, and potentially losing part—or all—of your home.

With owner’s title insurance, your legal costs and financial losses would be covered, and the underwriter would handle the claim.

Final Thoughts

While lender’s title insurance is usually non-negotiable, owner’s title insurance is your choice—but it’s a smart one. For a one-time cost at closing, you gain lasting protection for one of your most valuable assets.

Don’t leave your home investment vulnerable. Be sure to ask your title company about getting both types of coverage, and make sure you’re fully protected from day one.