What Is Enhanced Title Insurance & What Does It Cover?

When engaging in a real estate transaction, understanding property title is fundamental. A property title legally establishes ownership rights. Title insurance protects against financial losses and legal expenses from unforeseen issues or defects in the title’s history. This specialized insurance provides a safeguard, allowing property owners to proceed with their investment with a greater sense of security.

Standard Title Insurance Coverage

Standard title insurance policies provide foundational protection against certain title defects that existed prior to the policy’s effective date but were unknown at the time of purchase. These policies shield the insured from financial loss stemming from issues that could challenge their ownership. Common problems covered include forged documents, unreleased liens like mortgages or judgments, and errors or omissions in public records.

Standard coverage extends to undisclosed or missing heirs who might later claim an interest in the property. It also addresses issues like incorrect legal descriptions or boundary discrepancies present but undiscovered before the property transfer. While a title search aims to uncover these issues, hidden defects can still emerge.

There are two primary types of standard title insurance policies: an owner’s policy and a lender’s policy. An owner’s policy protects the property buyer’s equity and is typically purchased for a one-time fee at closing, remaining effective for as long as the owner or their heirs retain an interest in the property. A lender’s policy, often a requirement for financed purchases, safeguards the mortgage lender’s investment against title defects, ensuring their lien on the property is valid and enforceable.

Defining Enhanced Title Insurance

Enhanced title insurance represents a more comprehensive form of coverage, designed to offer broader protections to homeowners beyond what a standard policy provides. This type of policy incorporates additional risks not covered under traditional plans. It is typically available for purchasers of owner-occupied, one-to-four family residences.

A distinguishing characteristic of an enhanced policy is its capacity to cover certain issues that arise after the policy’s effective date, a departure from standard policies that primarily address pre-existing conditions. Furthermore, it can extend protection to certain known or discoverable issues that standard policies might explicitly exclude.

This advanced coverage is specifically tailored to address the evolving complexities of property ownership, including potential challenges not apparent during a conventional title search. While standard policies establish a baseline, the enhanced version builds upon that foundation to address a wider array of scenarios. The additional cost for an enhanced policy is typically a modest increase, often around 10% to 20% over a standard policy premium, paid as a one-time fee at closing.

Expanded Protections of Enhanced Policies

Enhanced title insurance policies broaden coverage, extending protection to specific scenarios typically excluded from standard policies. One notable expansion is protection against post-policy title issues, such as identity theft leading to fraudulent transfers of the property after the purchase date.

Policies often cover losses due to building permit violations from prior owners, where unpermitted structures might lead to forced removal or costly remediation. Similarly, protection is extended for violations of subdivision laws that existed before the purchase, which could prevent obtaining a building permit or force correction. Coverage also addresses issues arising from restrictive covenant violations, protecting the homeowner if forced to correct a violation or if their title is impacted.

Enhanced policies provide financial protection if existing structures are forced to be removed due to encroachments onto a neighbor’s land or over building setback lines. They also expand coverage for access rights, ensuring both vehicular and pedestrian access to the property based on legal entitlement.

Coverage for mechanic’s liens filed after the policy date for work performed prior to closing is another important feature, shielding the homeowner from unexpected debts incurred by previous owners. Some policies also protect against certain unrecorded easements that might not be discovered during a standard title search, which could affect property use. Another benefit is inflation protection, where the policy’s coverage amount automatically increases over time, often by 10% annually for the first five years, up to 150% of the original policy amount, to account for rising property values.