Do I Really Need Owner's Title Insurance? 
What It Covers, What It Costs, and Why It Matters 

​The short answer is yes. Owner’s title insurance is a one-time purchase that protects your legal ownership of your home for as long as you own it.

​Unlike lender’s title insurance, which only protects your bank, owner’s title insurance protects you, the buyer, from hidden title defects, fraud, unpaid liens, and ownership disputes that a title search may not catch.

For most homebuyers, a home is the largest investment of their lifetime. Owner’s title insurance is the safeguard that protects that investment. It's one of the most misunderstood parts of closing. Here's what it actually covers, what it costs, and why it's almost always worth having.

What is Owner's Title Insurance?

​​When you buy a home, you’re not just buying the physical structure — you’re buying the legal right to own it. That legal right is called “title.” Owner’s title insurance is a policy that protects your title against claims from the past.

Think of it this way: every home has a history. Previous owners, contractors, ex-spouses, heirs, lenders, and tax authorities may all have had some claim to the property at some point. Most of those claims are resolved before you close. But not all of them show up in public records — and that’s exactly the gap that owner’s title insurance fills.

If a title problem surfaces after closing — even years later — your owner’s title insurance policy pays the legal costs to defend your ownership, and covers financial losses if a valid claim forces you to give up part or all of the property. 

Isn't a Clean Title Search  Enough?

​​A successful real estate transaction requires a clear title, which means the title company runs a thorough search of public records to check for claims against the property. If any liens, encumbrances, or other defects are found — such as an erroneous survey or an unresolved code violation — they're cleared up before the sale closes.

But a title search can only find what's in the public record. It can't catch what never made it there. Even the cleanest-looking title can carry hidden defects: lost wills, forged signatures, clerical errors, adverse possession claims, fraud, illegal trusts, and undisclosed or missing heirs. A clear title search is a strong first layer of protection, but it isn't a guarantee — which is exactly why owner's title insurance exists as the backstop. 

What Does Homeowner's Title Insurance Cover?

​​Owner’s title insurance protects against a wide range of title defects, including:

• Forged deeds or signatures in the property’s chain of title
• Fraud, including identity theft by someone who sold a home they didn’t own
• Errors or omissions in public records
• Undisclosed or missing heirs who later claim ownership
• Unpaid property taxes, contractor liens, or judgments from previous owners
• Illegal trusts or improper estate transfers
• Boundary disputes and survey errors
• Easements or restrictions that weren’t properly recorded

Some of these situations are rare. Others,  like clerical errors in public records or contractor liens that weren’t released, are far more common than most buyers realize. According to the American Land Title Association (ALTA), title issues requiring corrective work arise in roughly one in three real estate transactions, though most are resolved before closing. Owner’s title insurance protects you from the ones that aren’t. That's the gap the owner's title insurance fills. 

Not All Title Insurance Policies are Equal. Check the Underwriter.

​​The policy itself matters as much as the coverage it lists. An owner's title insurance policy is only as good as the underwriter's ability to pay a future claim, so it's worth spending five minutes confirming who is actually backing the policy before you buy.

Independent rating agencies, Demotech, Inc., Fitch Ratings, and A.M. Best Co.,  publish financial-strength ratings for title insurance underwriters. Lilly Title & Settlement use Old Republic Title which has been in business for over 100 years. Since 1992, no other title insurer has had overall ratings than Old Republic Title.

What's the Difference Between Homeowner's and Lender's Title Insurance?

​ This is one of the most common points of confusion for homebuyers, so it’s worth spelling out clearly.

Lender’s title insurance (also called a loan policy) is required by virtually every mortgage lender. It protects the bank’s financial interest in your property — not yours. The buyer pays for it as part of closing costs, but the bank is the one who benefits.

Owner’s title insurance is optional in most states, but it protects you — the person who actually lives in and owns the home. It covers your equity, your legal fees, and your right to stay in your home if a title dispute arises.

You pay the lender's policy.
They get protected. Homeowner's title insurance is the policy that protects you.

How Much Does Title Insurance Cost?

​
​Owner’s title insurance is a one-time premium paid at closing. There are no ongoing monthly payments. The cost varies by state and purchase price, but in Virginia, a typical policy ranges from a few hundred dollars to roughly 0.5–1% of the home’s purchase price.

For the protection it provides, covering your home for as long as you own it, it’s one of the most cost-effective purchases you can make at the closing table. And because you’re already paying a closing attorney or settlement company, the added cost of the owner’s policy is relatively small compared to the overall transaction.

In Virginia, the seller often pays for the owner’s title insurance policy as a customary part of the transaction, though this is negotiable. Ask your settlement agent or real estate agent what’s standard in your area. 

Is Homeowner's Title Insurance Required in  Virginia?

​No. In Virginia, the homeowner's title insurance is not legally required. However, lender's title insurance almost always is required if you're financing the purchase with a mortgage.

While you can technically waive the owner’s policy, doing so means you’re accepting full personal liability for any title problems that arise after closing.

For most buyers, skipping the owner’s policy to save a one-time fee is a gamble that isn’t worth taking, especially when the alternative is leaving your single largest asset unprotected. 

Does Homeowner's Title Insurance Protect Me If I Sell?

​Yes. If you decide to sell your home in the future, your owner’s title insurance policy can also protect you as the seller.

If a title claim surfaces during the sale such as an old lien, a boundary dispute, or a recording error, for example, your policy may cover the costs of resolving it so the sale can proceed.

This is an often-overlooked benefit. The policy you purchase when you buy your home continues to protect you through future transactions.

Work with a Title Company You Can Trust 

​At Lilly Title & Settlement, we handle real estate closings for buyers and sellers throughout Staunton, Waynesboro, the Shenandoah Valley, and beyond. We take the time to explain your title insurance options clearly — so you close with confidence and peace of mind.

Questions about owner’s title insurance? Contact us at our Staunton, VA office or visit lillytitle.com to learn more about our homeowner title services.

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Reach out to Lilly Title & Settlement today to schedule your closing.

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