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Florida Title Insurance

What is title insurance?

Title insurance is a common type of indemnity insurance that protects a holder from financial loss suffered due to an inaccurate or defective issue in the chain of title. Unlike homeowner’s hazard insurance, title insurance works retroactively, meaning it covers items occurring before your ownership of the property. There are two main types of title insurance – owner’s title insurance covers a property owner’s claim to the land, whereas a lender’s loan policy insures their lien position.

Why do I need title insurance?

Purchasing property can be an exciting yet stressful venture. Title insurance plays an integral role in the real estate process and can negatively affect the outcome of a purchase if not done properly. There are many scenarios that could go wrongly or have negative consequences for the parties involved in a transaction. It is imperative to ensure protection in the event of a defect in the chain of title. Title insurance protects both the buyer in situations where transfer of ownership is unclear or disputed, or the lender if their lien priority is affected.

Is title insurance required in the state of Florida?

While not required, oftentimes title insurance is a negotiated factor in most sales transactions. In most residential transactions, sellers pay for the owner’s title insurance policy. In circumstances which sellers do not pay for the title insurance, buyers should still consider owner’s insurance for their own peace of mind. It is advisable to consider purchasing an owner’s policy prior to buying any property.

Most lenders require borrowers to purchase a loan policy to protect the lender in the unlikely event the priority of their lien is disputed, invalid, or ineffective. That being said, purchasing a lender’s policy does not protect the buyer. In the event of a legality or ownership dispute, that buyer could lose the property and any finances they’ve contributed to it. This is why investing in owner’s title insurance, while not mandatory, is a wise financial decision that should be carefully considered before purchasing any property.

How is title insurance calculated in Florida?

Florida offers promulgated title insurance premiums, meaning that rates are set by the state. You can calculate title insurance costs using the state-specific promulgated formula. Insurance premiums vary based on the purchasing price of the property. In the state of Florida, title insurance premiums are calculated by the following formula:

  • Property with a purchasing price of $100,000 or lower has an insurance premium calculated at $5.75 per every $1,000.
  • Property with a purchasing price of over $100,000 and up to $1 million has a lower insurance premium of $5.00 per every $1,000.

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