When you’re buying a property, it’s imperative to get insurance to protect that property as well. That acts as a safety blanket, to ensure that nothing bad or undesirable that happens leaves long-term impacts. But there are many insurance policies out there. It’s reasonable to get confused about which one to select. Take, for instance, the difference between title insurance, and property and casualty insurance.

These are two different sets of policies that will protect your property and keep you safe. Let’s take a closer look at them, where they converge, and where they differ.

Title Insurance

Title insurance is a type of indemnity insurance that protects lenders and homebuyers from financial loss which could result from defects in a title to the property. Lender’s title insurance and owner’s title insurance are the common options here. These protect the buyer or the lender from unfortunate consequences resulting from issues with the title of the property. As is apparent, a clear title is needed for any real estate transaction.

An examination of public records to determine and confirm a property’s legal ownership is a necessary first step. These determine whether there are claims on the property or if other problems are present. Erroneous surveys and unresolved code violations are two examples of such problems.

Title insurance protects both the lenders and homebuyers against damage and loss occurring from encumbrances, liens, and other defects in a property’s title. The common claims filed against a title are back taxes, conflicting wills, and others.

A basic owner’s title insurance policy covers the following:

• Mistaken or flawed records.
• Encumbrances and judgments against property, such as outstanding liens and lawsuits.
• Ownership by another party.
• Incorrect signatures on documents, fraud, and forgery.
• Restrictive covenants such as terms that reduce value or enjoyments, such as unrecorded easements.

The different types of title insurances are lender’s title insurance and owner’s title insurance (including any extended policies). Lenders usually require the borrower to purchase a lender’s title insurance policy to protect the lender if the seller is not legally able to transfer the title of ownership rights. A lender’s policy would protect the lender against loss. An issued policy signifies the completion of a title search and would offer some assurance to the buyer.

Risks of Not Having Title Insurance

A lack of title insurance exposes the transacting parties to a major risk in case there’s a title defect. Imagine you get the house of your dreams to find out after closing that you have to pay unpaid property taxes from the previous owner. Without any title insurance, the financial burden of this claim for back taxes solely rests with the buyer. You’ll either have to pay the outstanding property taxes or risk losing your home to the taxing entity. The same coverage protects the buyer for as long as they have an interest in the property.

Property and Casualty Insurance

This type of insurance is a kind of coverage that protects you and the property you own. It helps cover stuff that you own, like your car and home. Casualty insurance is the policy that has liability coverage to protect you if you’re legally responsible for an accident that creates injuries to another person or damage to someone else’s belongings. Property and casualty insurance are normally bundled together into a single insurance policy. It can include homeowner’s insurance, car insurance, condo insurance, renter’s insurance, power sports insurance, and landlord insurance.

Imagine if a visitor comes and falls inside your home and fractures their leg. Or if an individual isn’t able to walk and can’t perform their job after sustaining an injury on your property. Or what if your home is vandalized and damaged? Or banged up by a covered weather incident? In all these scenarios, property and casualty insurance would help you avert long-lasting damages by helping you pay all the necessary bills and helping you fix your home.

• Casualty insurance includes liability, vehicle, and theft insurance.
• You can purchase it to protect yourself from financial loss if you’re legally liable for injury to another or damage to property.
• Essential casualty insurance is businesses that have workers’ compensation.

To be legally liable, negligence has to be demonstrated. Which is the failure to use proper care in your actions. That negligence results in harm to another and the offending party is liable for the resulting damages. People in this industry often call liability losses third-party losses. The person insured is the first party and the insurance company is the second party. The third party is the person to whom the insured is liable. Most businesses need casualty insurance coverage, too.

You Need Both Insurances

For maximum safety, you must purchase both policies. That way, your experience of purchasing a new property will be smooth, and so will your experience post-purchase in case anything goes wrong. That is why you must purchase both, just make sure it’s from an insurance agent who has your best interest at heart. That way, he’ll be able to help you deal with whatever you need to deal with smoothly, and from a personal perspective.

Make Sure you download our one page informational guide on the differences between Property and Casualty insurance and Title Insurance! See below: