Title Insurance Policy (Owners & Lenders)

[mebprez]

Hi Everyone,

When I bought my home I had to pay for two different title insurance policies.  I paid for a lenders policy which covered the amount of the purchase price that was financed and I paid for a owners policy which covered the total purchase amount.  My question is, is this right?  Why would I pay for an owner's policy that covers the full purchase price of the home?  Shouldn't the lenders policy cover the amount of the loan and the owners policy cover amount of down payment the buyer made?  The coverage between the two policies together should equal the total purchase price of the home.  Atleast thats what I'm thinking.  If anyone can clarify this issue for me, I would greatly appreciate it.

Thanks

[Dave T]

Let's say that you only purchased a lender's title insurance policy.  Now, what happens when a undiscovered defect in the title is brought to light.  Perhaps a previous owner's signature was forged, and now the previous owner wants to reclaim the property.

If the claim is upheld, the previous owner gets their property back, and the lender's title insurance policy pays off the outstanding mortgage balance.  You have no house, and all the money you spent on mortgage payments over the years is lost.

An owner's title insurance policy here will come to the rescue.  In the above situation, the lender is paid off and the house goes back to the previous owner.  Now, with owner's title insurance for the full purchase price of the property, you will be given enough cash to purchase another property of similar value.