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There are two basic kinds of title insurance:

• Lender or mortgagee coverage
• Owner's coverage

Most lenders require mortgagee title insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection. When title insurance is provided, lenders are willing to make mortgage money available when all of the title issues have been resolved.

Owner's title insurance lasts as long as you, the policyholder - or your heirs - have an interest in the insured property. This may even be after you have sold the property.

Depending on local practices and state law where the property is located, you may pay an additional premium for an owner's policy or you may pay a simultaneous issue charge - usually a smaller amount - for the separate lender coverage. You may even split settlement costs with the seller for the lender's or owner's policy.

An important part of title insurance is its emphasis on risk elimination before insuring. This gives you, as the policy holder, piece of mind for avoiding title claims and losses.

Title insuring begins with a title search of public land records that affect the real estate concerned. An examination is conducted by the title agent or attorney on behalf of the title insurance underwriter to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all "material objections" to the title. Frequently, documents that don't clearly transfer title are found in the "chain", or history that is assembled from the records in a search. Here are some examples of documents that can present concerns:

• deeds, wills and trusts that contain improper wording or incorrect names
• outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes
• easements that allow construction of a road or utility line
• pending legal action against the property that could affect a purchaser
• incorrect notary acknowledgements

Through the search and the examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.

In spite of all the expertise and dedication that go into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises. Some examples of hazards include:

• a forged signature on the deed, which would mean no transfer of ownership to you
• an unknown heir of a previous owner who is claiming ownership of the property
• instruments executed under an expired or a fabricated power of attorney
• mistakes in the public records

Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured and will either correct the title or pay valid claims - all for a one-time charge at closing.

Your home may be your most important investment. Before you go to closing, ask about your title insurance protection and be sure to protect your home with an owner's title insurance policy.