What an owner's title policy covers that the lender's policy does not

At a financed closing there are usually two title policies on the settlement statement. The lender's policy protects the lender, up to the loan amount, and it shrinks as the loan is paid down. The owner's policy protects the buyer, for the purchase price, and it lasts as long as the buyer or their heirs hold an interest in the property. The confusion is understandable: the buyer often pays for both. But paying for the lender's policy buys the buyer nothing. If a forged deed, an unknown heir, a missed lien or a boundary problem surfaces five years later, the lender's policy makes the lender whole and leaves the owner to fund their own defence. Title insurance is also unusual among insurance products in that it looks BACKWARD. It is not covering something that might happen next year; it is covering defects that already existed on the day of closing and were not found in the search. That is why the premium is paid once. The exceptions schedule is the part nobody reads and the part that matters. Survey matters, easements, restrictions and anything specifically excepted are carved out of the coverage. A survey ordered before closing is what converts several of those general exceptions into specific, known facts. For anyone in this group who touches a closing: when a buyer says "I have title insurance," the useful follow-up is which policy, and what is on Schedule B. This article is general information, not legal, tax or financial advice. Rules change and every deal is different — check your own case with a licensed professional. Alberto Zaltzberg — Adonait · adonait.com