Legacy Title Team
Title Insurance vs Homeowners Insurance: What's the Difference?
When it comes to protecting your investment in real estate, both title insurance and homeowners insurance come into play in their own ways. It can be easy to mix the two up, but their different purposes and different kinds of protection provided set them apart from each other! In this blog post, not only will we differentiate title insurance and homeowners insurance, but we will also show how they can work together to protect your investment.
What is homeowner insurance?
Homeowners insurance pays for losses and damage to your property if something unexpected happens. Such as natural disasters, theft, fire, burglary, etc. It also provides liability coverage in case someone is injured on the property or in the home. When you have a mortgage, your lender wants to make sure your property is protected by insurance. That’s why lenders generally require proof that you have homeowner’s insurance. 
What is title insurance?
Title insurance protects the owner of the property and the mortgage lender against future claims for any unknown defects in the title to the property at the time of sale. Claims can arise as a result of fraud, forgery, unpaid real property taxes, judgments, liens, or other encumbrances that were not discovered during a search of the property’s title history conducted before the sale. 
Unlike homeowners insurance, title insurance does not cover damages to the property or personal property, but rather any financial loss related to title defects.
How do they work together?
Title insurance and homeowners insurance work together to provide comprehensive protection for real estate owners and lenders. While title insurance protects against financial losses related to title defects , homeowners insurance protects against physical losses to the property or personal property . Homeowners insurance is typically required by lenders, while title insurance is optional, but highly recommended.
To put everything in simple terms homeowners insurance protects you from what might happen, while title insurance protects you from things that have already happened, but are unknown or hidden. By having both types of insurance, you can protect yourself against both legal and physical risks all while having the peace of mind that your investment is safeguarded.
 “Title Insurance.” Department of Financial Services, https://www.dfs.ny.gov/consumers/help_for_homeowners/title_insurance. Accessed 21, Feb. 2023.
 “What Is Homeowner's Insurance? Why Is Homeowner's Insurance Required?” Consumer Financial Protection Bureau, https://www.consumerfinance.gov/ask-cfpb/what-is-homeowners-insurance-why-is-homeowners-insurance-required-en-162/. Accessed 21, Feb. 2023.