Title insurance is a one-time insurance policy that protects homeowners and lenders against financial loss from defects in a property's title—including undisclosed liens, ownership disputes, forged documents, and recording errors. Unlike other insurance that covers future events, title insurance specifically protects against problems that existed before you purchased the property. In Utah, title insurance typically costs between $1,000 and $2,500, paid once at closing.
How Does Title Insurance Work?
Title insurance works differently than other types of insurance. Before issuing a policy, the title company conducts a thorough title search—examining public records, deeds, court records, and property indexes to identify any issues with the property's ownership history.
The title insurance process includes three key steps:
- Title Search: The title company researches the property's complete ownership history, looking for liens, judgments, easements, and other encumbrances
- Title Examination: A title examiner reviews the search results to identify potential problems that could affect your ownership
- Policy Issuance: Once cleared, the title company issues a policy protecting you against undiscovered defects
If a title problem surfaces after closing—such as an unknown heir claiming ownership or an undiscovered tax lien—your title insurance company covers legal defense costs and financial losses up to your policy amount.
Key Point
What Does Title Insurance Cover?
Title insurance protects against defects that existed before your purchase date. Coverage includes both known risks discovered during the title search and unknown risks that surface later.
Standard title insurance coverage includes:
- Undiscovered liens — Unpaid contractor bills, property taxes, or HOA assessments attached to the property
- Forged documents — Fraudulent signatures on previous deeds or mortgages in the chain of title
- Recording errors — Mistakes in public records, incorrect legal descriptions, or filing errors
- Unknown heirs — Previously unknown family members claiming ownership rights
- Boundary disputes — Survey errors or encroachments discovered after purchase
- Fraud and impersonation — Previous owners who weren't who they claimed to be
- Missing documents — Unrecorded easements, rights-of-way, or other interests
What title insurance does NOT cover:
- Issues that arise after your purchase date
- Problems you knew about before buying
- Zoning violations or building code issues
- Environmental hazards
- Native American land claims (in some policies)
Owner's Title Insurance vs Lender's Title Insurance
There are two types of title insurance policies, and they protect different parties. Understanding the difference is essential for Utah homebuyers.
| Feature | Owner's Title Insurance | Lender's Title Insurance |
|---|---|---|
| Who it protects | You, the homeowner | Your mortgage lender |
| Required? | No (but highly recommended) | Yes, if financing |
| Coverage amount | Full purchase price | Loan amount only |
| Duration | As long as you own the property | Until mortgage is paid off |
| Who pays | Negotiable (often the seller in Utah) | Typically the buyer |
Lender's title insurance protects only the mortgage company's investment. If a title defect surfaces and you lose the property, the lender's policy covers their loan—not your equity or down payment.
Owner's title insurance protects your investment. The policy covers your equity, legal defense costs, and financial losses if someone successfully challenges your ownership.
Utah Practice
How Much Does Title Insurance Cost in Utah?
Title insurance in Utah is a one-time premium paid at closing. There are no monthly or annual payments—a single premium provides coverage for as long as you own the property.
Typical Utah title insurance costs:
| Home Price | Owner's Policy | Lender's Policy | Combined |
|---|---|---|---|
| $300,000 | $800–$1,200 | $400–$600 | $1,200–$1,800 |
| $400,000 | $1,000–$1,500 | $500–$750 | $1,500–$2,250 |
| $500,000 | $1,200–$1,800 | $600–$900 | $1,800–$2,700 |
| $750,000 | $1,600–$2,400 | $800–$1,200 | $2,400–$3,600 |
Factors that affect title insurance cost:
- Purchase price — Higher property values mean higher premiums
- Loan amount — Affects lender's policy cost
- Property history — Complex chains of title may require additional research
- Endorsements — Additional coverage options increase cost
Money-Saving Tip
Do I Need Title Insurance?
Yes—title insurance is strongly recommended for all Utah homebuyers, even cash buyers. Here's why:
If you're financing your home: Your lender will require a lender's title insurance policy. This is non-negotiable for mortgage approval. However, lender's insurance only protects the bank—not you. Purchasing an owner's policy protects your actual investment.
If you're paying cash: No one requires you to purchase title insurance. But without it, you're personally liable for any title defects. A single undiscovered lien or ownership claim could cost you tens of thousands in legal fees—or your entire property.
Real title insurance claims include:
- A Utah homeowner discovered a $47,000 IRS tax lien from a previous owner after closing. Title insurance paid the lien.
- An heir to a deceased previous owner sued for property ownership 3 years after purchase. Title insurance covered $38,000 in legal defense and settlement costs.
- A forged deed in the chain of title was discovered, clouding ownership. Title insurance funded the quiet title action.
The cost-benefit calculation: A $1,500 one-time premium protects a $400,000 investment for decades. That's less than 0.4% of your home's value for permanent protection.
How to Get Title Insurance in Utah
Getting title insurance is straightforward—the title company handles most of the work during your closing process.
Step 1: Choose a title company
In Utah, buyers typically have the right to choose their title company. Your real estate agent can recommend options, or you can select your own. Prospect Title Insurance Agency has served Utah homebuyers since 1967.
Step 2: Open escrow
Once you have an accepted offer, the title company opens an escrow account and begins the title search process.
Step 3: Review the title commitment
Before closing, you'll receive a title commitment (also called a preliminary title report). This document shows:
- The current owner
- Legal description of the property
- Existing liens, easements, and encumbrances
- Exceptions that won't be covered by your policy
Step 4: Resolve any issues
If the title search reveals problems—like unpaid liens or recording errors—these must be resolved before closing. The seller typically handles most title clearing.
Step 5: Pay premium at closing
Your title insurance premium is included in your closing costs. After closing, you'll receive your owner's title policy within a few weeks.
Frequently Asked Questions
Yes, title insurance is still recommended for cash buyers. While lenders require title insurance to protect their investment, owner's title insurance protects your ownership rights against claims, liens, or defects that may surface after purchase—regardless of how you paid. Without title insurance, you're personally liable for any title problems.
Key Takeaways
- 1Title insurance protects homeowners against ownership defects that existed before purchase—liens, forgeries, recording errors, and ownership disputes
- 2Two types exist: Owner's title insurance (protects you) and lender's title insurance (protects your bank)
- 3One-time cost: Utah title insurance typically runs $1,000–$2,500, paid once at closing with no renewals
- 4Lasts forever: Coverage continues as long as you or your heirs own the property
- 5Highly recommended for all buyers, including cash purchasers—the cost is minimal compared to potential losses
Protect Your Utah Home Investment
Understanding title insurance helps you make informed decisions about protecting your largest investment. At Prospect Title Insurance Agency, we've helped Utah families secure their homeownership for over 55 years.
Get a Free Consultation