It’s one of the most common questions we hear from buyers, and a fair one to ask — title insurance is a real cost added to your closing, and it’s not always obvious what it actually protects. Here’s the short answer: in most cases, yes, and for good reason. Here’s the full breakdown of when it’s required, when it’s optional, and why it’s worth having either way.
The Short Answer: It Depends on Which Type
There are two types of title insurance, and they work differently:
- Lender’s title insurance — almost always required if you’re financing your purchase with a mortgage. Your lender won’t close the loan without it.
- Owner’s title insurance — optional in most cases, but strongly recommended, since it’s the only policy that protects your own equity in the property, not just the bank’s loan amount.
Why Lender’s Title Insurance Is Effectively Required
If you’re getting a mortgage, your lender is taking on risk by loaning you money secured against the property. They require a lender’s title policy to protect their financial interest in case a title defect surfaces after closing. Without it, most lenders simply won’t fund the loan — so for the vast majority of buyers, this isn’t really optional in practice.
Why You Still Want Owner’s Title Insurance, Even Though It’s Optional
Here’s the part that often gets missed: lender’s title insurance only protects the bank’s loan balance, which shrinks every year as you pay down your mortgage. It does not protect your down payment, your equity, or your ownership rights if a title problem surfaces. Owner’s title insurance is the only policy that protects you — and it lasts as long as you, or your heirs, own the property, not just until the loan is paid off.
A one-time premium at closing, typically a small percentage of the purchase price, buys protection against things a title search sometimes can’t catch — like forged historical documents, undisclosed heirs, or old recording errors.
What Title Insurance Actually Protects You Against
- Forged or fraudulent deeds from earlier in the property’s history.
- Undisclosed liens — unpaid taxes, contractor bills, or judgments attached to the property.
- Missing heirs or disputed inheritance claims affecting past ownership.
- Clerical and recording errors made years or decades ago at the county clerk’s office.
- Boundary and easement disputes not caught during the original search.
What Happens If You Skip It
If you waive Owner’s title insurance and a covered issue surfaces later, you’re financially responsible for resolving it yourself — which can mean legal fees, settlement costs, or in rare cases, a real threat to your ownership. A title search catches most problems before closing, but it can’t catch everything; title insurance is what covers you for what the search couldn’t find.
How Much Does It Actually Cost?
Title insurance is a one-time premium paid at closing, typically a small percentage of your purchase price — far less than most other forms of insurance relative to what it protects. You can see Northway Title’s full fee schedule for specific, itemized pricing before you order.
Frequently Asked Questions
Is title insurance required by law in New York?
No state law requires it, but lender’s title insurance is effectively required by mortgage lenders as a condition of financing. Owner’s title insurance is optional but strongly recommended.
Do I need title insurance if I'm paying cash for a home?
Yes, it’s still recommended. Without a lender requiring it, you’d have no financial protection at all against a title defect unless you purchase an Owner’s policy yourself.
Does title insurance cover problems that happen after I buy the home?
No — title insurance covers defects that existed before your purchase but weren’t discovered until later. It does not cover new liens or issues you create after closing.
Can I shop around for title insurance, or does my lender choose it?
In most cases, buyers can choose their own title company. It’s worth confirming with your lender, but you generally aren’t required to use whichever provider they suggest.
How long does title insurance coverage last?
An Owner’s policy lasts as long as you, or your heirs, own the property — it’s a one-time payment with lifetime coverage, not a recurring premium.