When purchasing a home, one of the lesser-known but critically important components of the transaction is title insurance. This form of insurance protects against financial loss from defects in a property’s title, which is the legal right to own and use the property. These defects can include issues like unpaid property taxes, liens, conflicting wills, fraud, or clerical errors in public records. Even with a thorough title search, some problems may remain hidden and only surface after the purchase is complete.
There are two main types of title insurance: lender’s title insurance and owner’s title insurance. Lender’s insurance is typically required by mortgage companies to protect their investment in the property. Owner’s title insurance, on the other hand, is optional but highly recommended, as it protects the buyer’s equity in the home.
The premium for title insurance is a one-time fee paid at closing. The cost in New York is typically 0.41% of the purchase price so the cost can range substantially. Unlike other types of insurance that require ongoing payments, title insurance offers lifetime coverage for a single upfront cost.
So, is title insurance worth it in 2025?
Overall, the vast majority of our clients purchase title insurance on the grounds that they believe it’s a valuable safeguard in real estate transactions. Despite advances in digital record-keeping and title search technologies, title defects still occur, albeit infrequently. For example, a previously unknown heir could claim ownership, or a past lien might resurface due to a clerical error. Without title insurance, resolving these issues could cost homeowners thousands in legal fees—or worse, result in the loss of the property.
There are times when our office may recommend against the purchase of title insurance, i.e., when our clients are savvy legal or insurance professionals who could likely succeed in taking matters into their own hands in the event they would have to address a claim adverse to their interest in the property, although these circumstances arise hardly ever.
In conclusion, whether the one-time cost of title insurance is “worth it” for any purchaser, the best answer lies within the client: if insurance coverage helps one sleep at night, regardless of the likelihood of a claim arising, then buy the insurance. If saving a few thousand dollars in closing costs will better help one sleep at night post-closing regardless of the possibility of the hassles of a potential claim being made against the property, skip the title insurance.