Understanding Title Insurance

Whether you currently own a home, or plan to in the future here are some important facts to understanding Title insurance. Firstly, what is a Title? The word Title is a legal term that means you have legal ownership of property. Title is obtained when the owner signs the deed or transfer document over to you. The Title is then registered in the government's land registration system.

 

 

Do I really need Title insurance?

Title insurance is not required in the Province of Ontario and the decision to purchase it or not should be explained by your lawyer, Title insurance company or insurance agent/broker in order for you to fully understand what type of protection Title insurance can provide you. Title insurance policies can be purchased at the time when you purchase your home, or at any time after the purchase is made, however policies for existing home owners are slightly different than those obtained at purchase.

Where do I purchase Title insurance?

You can purchase residential Title insurance through your lawyer or Title insurance company or through your insurance agent/broker

What does it cover?

Title insurance is purchased with a one-time fee or premium at the time of purchase and generally provides protection from losses such as:

  • Unknown Title defects that prevent you from having clear ownership of the property
  • Existing liens against the property's Title such as unpaid debts of the previous owner like utilities, property taxes or condominium fees
  • Encroachment issues such as a structure on your property that crosses the property line into an abutting property that may need to be removed because it is not on your property
  • Title fraud issues, or errors in past surveys and public records or any other Title related issues that can affect your ability to sell, mortgage or lease your property in the future

What’s not covered with Title insurance?

As with all insurance policies, it is very important to read and understand the policy to be aware of the scope of coverage provided, and most importantly what may be excluded. Things such as:

  • Any known Title defects that where revealed to you before you purchased the property
  • Environmental hazards such as soil contamination
  • Native Land claims
  • Issues that may only be discovered by new surveys or inspection of the property
  • Unrecorded liens and encroachments
  • Zoning By-law violations from changes, renovations or additions to the property

There are 2 main types of Title insurance available (1) the Owner's policy, and (2) the Lender's policy.

The Owner's policy protects the property owner from various Title related issues listed in the insurance policy for as long as the property is owned, and will set a maximum amount of coverage.

The Lender's policy protects the lender from losses in the event that the property's mortgage is invalid or unenforceable. This coverage is usually for the amount of the property’s mortgage.

When making a claim:

  • Double check to verify that the Title related issue is covered by your policy.
  • Make sure that you submit your claims as soon as possible and do so in writing, to the Title insurance company and explain in detail any losses you incurred as a result of the Title problem.
  • Be sure to include the policy number your contact information and any relevant documents related to your claim.
  • Always keep a copy of your claim for your own records.

Once received your Title insurance company will then contact you to let you know that the claim was received. A decision about your claim should be communicated to you within a reasonable amount of time. In the event you are not satisfied with how your claim is being handled, there are certainly steps you can take. Each company has a consumer Complaint Officer who oversees the complaint handling process. This Officer is an employee of the insurance company and is responsible for ensuring your complaint is addressed.

The Financial Consumers Commission of Ontario (FSCO) has compiled a list of all Consumer Complaint offices which is available online at www.fsco.gov.on.ca or via telephone toll free at 1-800-668-0128.

 

Source of Info: The Financial Consumers Commissions of Ontario official website

www.fsco.gov.on.ca

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