What Is Title Insurance?
Title insurance provides a special kind of coverage for buyers of real estate.
When you buy a property, the previous owner transfers the deed over to you. This deed shows who has “title", or legal ownership of the property. A deed can sometimes be fraudulent or incorrect, and such issues can make it possible for people to challenge your ownership of the property.
Title issues aren't common in Canada, but title insurance is one of the only ways to protect your finances against them.
What title insurance covers
Title insurance only covers title-related issues. It is not a substitute for home insurance.
Title insurance covers issues related to the ownership of the property, whereas home insurance covers your home and its contents. They are two separate types of insurance policies.
What title Insurance covers | What title insurance doesn't cover |
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Benefits of having title insurance
Despite the clear benefits of buying a title insurance policy, some people may still not be convinced that it’s necessary. Consider the following if you’re unsure about title insurance:
Comprehensive coverage. Title insurance covers you for just about every scenario that’s related to property ownership. It’s a binding contract that gives you more coverage than a lawyer’s opinion.
Peace of mind. Buying a home is an expensive and stressful process, especially for first-time home buyers. Title insurance can provide peace of mind that you’re protected against any title fraud or defects.
One-time cost. Purchasing title insurance is relatively inexpensive. You only need to buy it once and you can often pass title insurance on to your children, a divorced spouse or other beneficiary.
Legal coverage. If you need to legally defend your home’s title, your title insurance provider will pay for your legal expenses.
Title insurance is just one home buying cost to consider. Using a land transfer tax calculator and a closing costs calculator can give you a realistic idea of the upfront costs associated with a home purchase.
How to buy title insurance
Many people buy title insurance through their real estate lawyer during the closing process. However, you could also get it on your own or through an insurance broker.
Some common Canadian title insurance providers include:
Chicago Title Insurance Company.
FCT Insurance Company Ltd. (carrying on business under the name First Canadian Title).
Lawyers’ Professional Indemnity Company (TitlePLUS).
Travelers Guarantee Company of Canada.
Stewart Title Guaranty Company.
The price of title insurance differs depending on the value of your property and the insurance company you choose. Generally speaking, title insurance premiums range from $250 to $400 CAD, on average. This is a one-time fee and the insurance is still valid if you pass on the home to your spouse, children or heirs.
Although it’s technically optional, every homeowner can benefit from title insurance and most opt to purchase a policy for financial protection.
Title insurance is typically purchased at the time of closing, so there won’t be any surprises when you take possession of the property. That said, you may be able to purchase title insurance after taking possession of the property as well, but the coverage may be different.
If you rent your home, there’s no need to get title insurance, though you may want to consider renter’s insurance.
What types of properties can have title insurance?
Residential properties
Cottages.
Vacant land.
Cooperatives.
Leased or investment properties.
Rural properties.
Commercial properties
Office buildings.
Industrial buildings.
Shopping centres.
Apartment buildings.
Rental units.
Warehouses.
Vacant commercial land.
Leased commercial properties.
Title insurance is optional, and an added expense, so it's fair to wonder if it's worth paying for. But like most forms of insurance, it's easy to convince yourself you don't need it — until it's too late.
DIVE EVEN DEEPER
Clay Jarvis
