Title insurance : what’s not covered?

posted by Chris Valentine

With their savings, Peter and Jane finally became the owners of a house. However, it requires a couple of renovations. They decide to do it themselves. When they demolished the walls, they found mould in the bathroom. Jane didn’t know if they would have to spend more money to fix the problem, but Peter reassured her: “It’s Okay! We have title insurance.”  

Sadly, Peter ignored what a title insurance really covers. If you consider buying a title insurance, remember that it will cover your renovations only if it’s enforced by the local municipality because the previous homeowners did work without a permit. If it’s not the case, you won’t be covered.   

People often think that title insurance is the same as home insurance. So, title insurance companies often receive demands that are covered by home insurance, but not title insurance.  

For example, Suzy and Mike have title insurance. They found that the carpet in the basement was wet and water was infiltrating their house. There was a crack in the wall where the water was coming. If the problem was caused by the previous homeowners who did work without a permit, then, title insurance would have covered it. But it was not the case, so the title insurance company did not cover them.     

There are other claims that are not covered by title insurance, like infestations, weather or fire damage and a leaking roof, for example. Title insurance covers issues like encroachment, forgery or fraud to protect the ownership of your house.  

Title insurance and home insurance do not cover the same claims. Make sure you have enough information about these two types of insurance before making a decision. The best choice is to have both a title insurance and a home insurance to protect yourself financially

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