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The Complete Guide to Title Insurance in Virginia: Why You Need It

a tiny home, keys, and a pen on title insurance papers

When you purchase a piece of property, either residential or commercial, you become the rightful owner and take title to that property. Contrary to what many believe, a title is not a physical paper like a deed, but rather a right that says you are the legal owner and have the right to use and control it.

To ensure that you get all the rights that come with having a title, a title search will be performed by your title company before the settlement —- and you will be offered the opportunity to purchase a title insurance policy.

If you find yourself asking whether or not you need to make this additional investment, here is your complete guide to title insurance in Virginia and why you need it.

What is Title Insurance?

When you invest in a title insurance policy, you have peace of mind that you will be spared from any future financial losses that may occur due to title defects or issues.

The title search performed by your title company will confirm the chain of title, making sure there are no liens or encumbrances, outstanding taxes or judgments, and the like. Sometimes these things may not appear on the title search but can arise later on. And, when they do, they can directly impact your title rights.

Title insurance offers protection against this.

Why You Need Title Insurance

You may be asking yourself if you really need title insurance. After all, how often do property owners actually tap into the power of their policy?

Title insurance covers losses that can happen when a claim is made against your property. These hidden risks can appear when you least expect it — or they may never appear at all. Unfortunately, you won’t know until it happens and the loss that can stem from it can be devastating. It only takes one claim.

Do not assume that other insurance policies will protect you as title insurance is different. Rather than protecting you from what may happen in the future, it is in place to protect you from things that happened in the past — before you took title to the property.

What is Covered By Title Insurance?

The exact coverage will depend on the type of policy and the level of coverage you purchase. Read through the policy carefully, including the exclusions, so that you have a good understanding of what is covered and what is not. Always ask your title company for clarification if needed.

Most title insurance policies will offer protection against financial loss up to the amount of the policy (usually the purchase price of the property). Should this battle for your rights to title end up in court, your title insurance policy will almost always cover your legal expenses, too.

Who is Protected By Title Insurance?

There are two main types of title insurance — lender’s and owner’s policies.

A lender policy, as its name suggests, is one that protects the lender. This reduces the risk they take when giving you the funds to make the purchase. If you are taking out a loan, you will almost always be required to purchase a lender’s title insurance policy.

An owner’s policy is one that protects you, the new owner. This policy is required if you want any sort of protection against financial loss since a lender’s policy is only in place for the lender.

How Much Does Title Insurance Cost in Virginia?

The cost of a title insurance policy in Virginia is going to vary as the price of the policy is usually a percentage of the property’s purchase price. This cost is set forth by the title company and not a regulated governmental body.

It is important to note that a title insurance policy is bought with only a one-time fee. In other words, it does not require additional premium payments to be made. Once an owner’s policy is purchased and the transfer document has been officially recorded, you will be protected for as long as you continue to have an interest in the property. A lender’s policy will remain in effect until the mortgage is satisfied.

Who Pays for Title Insurance in Virginia?

In most places throughout the United States, you will not find any specific laws or regulations stating who needs to pay for title insurance. Most of the time, it comes down to an agreement between the buyer and seller — especially when it comes to the owner’s title insurance policy. Lender’s policies are almost always the responsibility of the buyer.

In Virginia, it is customary for the buyer to pay for the owner’s title policy, as well as the lender’s policy. This is, of course, always up for negotiation between the parties.

Learn More About Title Insurance

If you still have questions about title insurance and whether or not it is the right choice for you, the title experts at Republic Title Inc. are here for you. Contact us today at (703) 916-1800.

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