Title insurance plays an important role in real estate transactions by protecting owners and lenders against financial loss resulting from defects in title to real property. Title insurance policies can cover either owners or lenders, though these policies will differ.

Lender’s title insurance protects against things like mechanic’s liens and unrecorded liens, unrecorded easements and access rights, and other defects in the title. Owner’s policies protect against things like forgery and fraud, defective recording, and restrictive covenants. These are just a few examples, though.

One of the more common types of claims filed against property title is for back taxes. This is because title companies sometimes overlook taxes because of confusion over documents. For the most part, though, claims against property title are rare. Insurance is still something you want to have, though, to cover all your bases.

People don’t usually shop around for title insurance the way they shop around for cars or clothes. Typically, people count on their real estate agent, mortgage lender, or attorney to refer them to a reliable title insurance company. Two new title insurance companies, going by the names EnTitle Insurance and OneTitle National Guaranty, are trying to change that.

Both companies are reportedly advertising to consumers directly over the Internet and offering quotes based on basic information about the property. This may be a newer approach, but other title insurance companies are beginning to change their marketing strategy and advertise more aggressively. Perhaps with these new approaches, title insurance will become something more homeowners end up shopping around for, at least a bit.

Source: The Wall Street Journal, “Online Upstarts Offering Title Insurance for Less,” April 5, 2014.