Is Title Insurance a Waste of Money?

Peter Chambers

Dec 9, 2022


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Buying a home can be a time-consuming process. You have to build a good credit score, get mortgage preapproval, find the home you want and make an offer, among other steps. When you finally get close to the end, you’ll have the option to buy title insurance. You may ask, “Is title insurance a waste of money?” This guide will lay out what title insurance is and the pros and cons of getting it.  

What Is Title Insurance?

Before discussing its merits, let’s talk about what title insurance is. You get this policy mear the end of the home-buying process. If you get title insurance, you protect yourself from someone else claiming they have ownership of your property. Why would someone else claim ownership of your property? There are many reasons why this could happen. It could happen years after you bought the home. 

Should You Get Title Insurance?

Is title insurance a waste of money? It’s helpful when you get into ownership disputes. These cases could end up in court and take months and years to settle. You could fork over tens of thousands of dollars in legal fees and headaches. Some of the issues homeowners find themselves in may include:

  • Unknown liens: One of the most common issues for new homeowners is liens on the property they’re unaware of. They could come from different sources, even if it’s the previous homeowner’s fault. They may have failed to pay a contractor or the local tax authority. These instances lead to someone else claiming ownership of your property.
  • Unknown easements: Easements allow a person legally to use someone else’s property for their use. A utility company may use an easement to go into your backyard to work on power lines without your permission. Title insurance will protect you from easement disputes.
  • Fraudulent claims:  You could run into an issue where a spouse, child or someone else claims ownership of your home, but they don’t have a realistic claim. Or, they could be someone you know pretending to be your spouse or heir to try and sneak away ownership of the property. Title insurance protects against this issue.

Is Title Insurance a Waste of Money?

Title insurance seems like a practical idea. If you think ownership issues could arise, it could be worth purchasing. However, there are some barriers in the way, including:

  • Price: Buying a house is an expensive feat. The home has a hefty price tag, and the road to closing on the house can put a hole in your wallet. Title insurance can be expensive, depending on your property’s value and the state you live.
  • Coverage: The type of title insurance you get differs with every company. You may get some coverage to protect against the issues mentioned above, but a lack of coverage could put you in a bind. Getting comprehensive coverage can be pricy but worth it if you have disputes.
  • Necessity: One of the top reasons people don’t get title insurance is the necessity factor. How likely is the homeowner to enter a dispute on their house? They’ll gauge the odds before deciding whether to get the insurance. Many states do not mandate title insurance, but not having it is risky.

Is Title Insurance a Waste of Money? Survey Says No

Buying a home is a complicated process. You need to take many steps, requiring you to shell out thousands of dollars in maintenance, fees and costs for things like title insurance. It may feel like another burden on your wallet, but it can be helpful down the road. If you can find room in the budget, title insurance is worth the cost. Is title insurance a waste of money? Considering the headaches it saves, it seems like buying this policy is well worth it. 

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