What’s not covered by title insurance?
Jen and Henry* saved up for years and finally bought a house, even though it needed a little work. They considered themselves pretty handy and to save a few bucks, they decided to do the renovations themselves. While demolishing walls, they found that mould was growing in the guest bathroom. Jen was distraught at the thought of spending more money to clean up and fix the issue, but Henry was not. “It’s not a problem,” Henry said. “We’ve got title insurance!”
Unfortunately, Henry, like many others, didn’t understand what title insurance covers. While title insurance does cover renovations and repairs that are enforced by the local municipality due to work that previous homeowners did without permits, it does not include all repairs.
We often get claims that are more suited to home insurance. For example, Michelle and Jake*, title insured homeowners, noticed that the carpet in their basement was wet and they could see water coming in from the side of the house. They found a crack in the foundation wall where the water was coming in. Had the previous homeowners finished their basement without a permit which caused this issue, title insurance would likely have covered it if the municipality required the removal or repair because it was done without a permit. However, since this was not the case, we were not able to pay out the claim.
Other claims that are not covered by title insurance (but may be covered by home insurance, depending on your policy) are a leaking roof, fire or weather damage, infestations, etc. Title insurance protects your ownership of the home and covers unknown issues like fraud, forgery, encroachments (if your shed turns out to be on your neighbour’s property or vice versa), previous homeowner’s lack of building permits, and more.
If you’re ever in doubt, feel free to call us to confirm your coverage!
*Names were used for illustrative purposes and have been changed to protect the privacy of our clients.
This is for general information only. For specific coverage, please contact your title insurer or home insurance company.