Title insurance vs home insurance – Do you know the difference?
Oct 9th, 2020 | By FCT
Many homeowners are uncertain about the differences between home insurance vs title insurance. Unfortunately, if you don’t understand the differences you can leave yourself vulnerable to unpleasant surprises down the road.
Take this quiz to learn more and to test your knowledge.
Title insurance is an insurance policy that protects property owners through an owner’s policy and lenders through a loan policy.
Title insurance is a one-time purchase that protects you from various losses such as title defects that you didn’t know about. It also protects you from liens on the property due to the previous owner’s unpaid debts.
Home insurance covers loss and damage to your residence as well as other structures on your property in certain instances.
Personal property coverage: covers the items inside your home. This includes furniture, clothing, electronics, jewelry and so on. Each policy will outline the maximum amount of personal property coverage that you are entitled to.
Title insurance coverage has to be renewed each year.
Each title in Canada is registered in the government’s land registration system.
A home insurance policy requires a monthly premium payment.
Home insurance protects you from natural disasters such as fire, wind, and lightning. It also provides you with flood and earthquake coverage.
Title insurance can only be purchased at the time you purchase your home.
Title insurance does not protect you from any other title issues that could impact your ability to sell, lease or mortgage your property in the future.
Title insurance includes the “duty to defend” clause which covers the legal expenses you incur while you deal with title issues.
Title insurance covers encroachment issues. An example of this would be if your backyard shed is actually on your neighbour’s property and must be removed. It also covers errors in surveys, as well as title fraud which is when a person uses false identification to get the title of your property and then gets a mortgage or sells the home without your knowledge.
A title insurance policy does not protect you from liens on the property due to the previous owner’s unpaid debts.
Title is a term that means you have legal ownership of a property. You get the title to a home when the previous owner signs the deed and transfers the property to you.
Purchasing title insurance involves a one-time fee, typically purchased at the same time as you buy your home.
As long as you own your property, the title insurance policy is valid and your policy likely extends to your heirs in a will or to a spouse after a divorce.
A lender title insurance policy protects the lender from any losses that could come up if a property’s mortgage is invalid.
Title insurance can be purchased for both residential and commercial properties.
Dwelling coverage protects you from natural disasters such as fire, wind, and lightning. Flood and earthquake coverage must be purchased separately.
There is no maximum personal property coverage amount in homeowner policy.
With Loss of use coverage, if your home becomes uninhabitable due to an event that is covered by your policy, you’ll get coverage for expenses such as a hotel stay and meals at restaurants while your property is being repaired.
There is a limit to how much coverage you get for loss of use. Always check with your insurance provider.
How did you do? Let us know in the comments.
Always carefully read your policy to know what your title insurance covers as there could be exclusions and exceptions in your policy.
Insurance by FCT Insurance Company Ltd. Services by First Canadian Title Company Limited. The services company does not provide insurance products. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request. Some products/services may vary by province. Prices and products/services offered are subject to change without notice.
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