Title insurance costs 0.5%–1% of your home’s purchase price, paid once at closing. On a $400,000 home, expect to pay roughly $1,000–$2,000 for both the lender’s policy (required) and the owner’s policy (optional but recommended). The premium is a one-time fee with no annual renewals.
Two Types of Title Insurance
Every mortgage purchase involves at minimum a lender’s title insurance policy. An owner’s title insurance policy is separate and protects you personally.
| Policy Type | Who It Protects | Required? | Who Usually Pays |
|---|---|---|---|
| Lender’s policy | The mortgage lender | Yes — required by all lenders | Buyer |
| Owner’s policy | The homeowner | No — optional | Buyer (most states); seller (FL, GA, AL, others) |
The lender’s policy only covers the lender’s financial interest — the outstanding loan balance. If a title defect surfaces, the lender gets made whole. You, the homeowner, get nothing under the lender’s policy.
The owner’s policy covers your equity — the full purchase price. If a problem emerges and you have to defend your ownership in court or lose the property, the owner’s policy covers legal fees and financial losses up to the policy limit.
What Title Insurance Costs by Home Price
| Purchase Price | Lender’s Policy (est.) | Owner’s Policy (est.) | Combined (est.) |
|---|---|---|---|
| $200,000 | $400–$600 | $600–$900 | $800–$1,200 |
| $300,000 | $550–$800 | $700–$1,100 | $1,000–$1,600 |
| $400,000 | $650–$950 | $850–$1,300 | $1,200–$2,000 |
| $500,000 | $800–$1,100 | $1,000–$1,500 | $1,500–$2,400 |
| $750,000 | $1,000–$1,500 | $1,400–$2,000 | $2,000–$3,200 |
Estimates. Actual premiums vary by state, title company, and coverage type.
Costs also depend on whether you buy a standard ALTA policy or an enhanced policy with additional coverage. Some states regulate title insurance rates; others allow title companies to set their own rates.
What Title Insurance Actually Covers
Before closing, a title company performs a title search — reviewing public records, court filings, and deed history going back decades. The search looks for liens, ownership disputes, unpaid taxes, easements, and recording errors.
Title insurance covers defects that existed before closing but were not discovered in the search:
- Undisclosed liens — A previous owner’s unpaid contractor or tax lien that was not on record
- Forged or fraudulent documents — Someone impersonated the prior owner in a transaction
- Clerical and recording errors — Mistakes in the chain of public records
- Unknown heirs — A deceased prior owner’s heir who was not located during probate
- Easement disputes — A neighbor’s legal right to cross your property that was not disclosed
- Boundary encroachments — A fence or structure that crosses onto your land or the neighbor’s
Title insurance does not cover:
- Problems you knew about before closing
- Issues that arise after closing (that is homeowner’s insurance territory)
- Environmental hazards, zoning violations, or HOA restrictions
- Normal wear and deterioration
Worked Example: Why Owner’s Policy Matters
You purchase a $380,000 home. Two years later a contractor surfaces claiming the previous owner owed $18,000 for work done on the kitchen. The contractor recorded the lien properly — but the county recorder made a filing error that buried it, and the title search missed it.
With an owner’s title insurance policy: Your insurer investigates, pays the $18,000 lien, and covers any legal fees. Your cost: $0.
Without an owner’s title insurance policy: You must pay the $18,000 lien to clear title or hire a real estate attorney to fight it. Legal defense alone can cost $5,000–$15,000. And your owner’s title insurance premium at closing would have been roughly $1,000–$1,300.
Simultaneous Issue Discount
When you buy both policies at the same time (which is the standard at closing), title companies typically offer a simultaneous issue discount on the second policy. The owner’s policy bundled with a lender’s policy costs significantly less than purchasing each separately. Always confirm whether the quote you receive reflects the simultaneous issue rate.
Can You Shop for Title Insurance?
Yes — and the CFPB encourages it. Federal law gives buyers the right to choose their title insurance company. Your real estate agent or lender may recommend a preferred title company, but you are not required to use them.
Comparing two or three title insurance quotes can save $200–$500 on a mid-range home purchase. States that regulate premiums have less variation; in unregulated states the difference can be larger.
For the full picture of what you will owe at closing, see our average closing costs guide and the breakdown of who pays closing costs. For more on the overall buying process, see how to buy a house.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy